New year savings goals

New year savings goals

Last updated: 17/01/2022

While the new year presents exciting new opportunities, it’s also a time to take stock. Many choose to review their budget and spending habits at this time of year, which – while sensible – can be a shock to the system.

But there’s cause for optimism. By coming up with an achievable plan – and sticking to it – this could be the year you really nail your savings goal. Whether it’s for a deposit on a house, or a chance to get away for a nice, long holiday, here are some tips for how to achieve your financial ambitions.

Step #1: Make a realistic budget

Top tip:
If you have an app which categorises your payments, such as your banking app, this should give you a good idea of your average monthly spend.

If you want to build up your savings, a good budget is the best place to start. This is essentially a health check for your household finances.

First, draw up a comprehensive list of your incomings and outgoings. In the case of the latter, start by listing your essential monthly outgoings, such as:

  • Rent or mortgage payments
  • Insurance premiums (home, car, pet etc)
  • Travel costs
  • Credit card and loan repayments
  • Utility bills
  • Membership costs

Then make a list of variable outgoings, such as food and groceries, clothes, entertainment, social activities, hobbies and so on. While this may seem less precise, try to be as accurate and realistic as possible.

Step #2: Identify where you can cut costs

Once you’ve identified all your regular expenses, you can work out where it’s possible to make savings.

Some may be obvious. Do you really need this subscription or that membership – especially if it’s potentially eating away at your savings goal? Also, do you have any unnecessary direct debits you’ve forgotten to cancel? Put an end to them now.

Cutting back on takeaways, having one less night out a month, and using cheaper brands can help crunch your costs.

Signing up for loyalty cards may also help you to save, especially if you regularly shop at certain retailers anyway. Most of the big supermarkets have their own loyalty cards, or are part of a wider scheme.

For example, by using a Nectar card, you can save money and accumulate points for discounts at Sainsbury’s, Argos, eBay and Just Eat, among others. And with a Tesco Clubcard, you can accumulate vouchers which can also be redeemed at other retailers – getting up to three times the voucher value on dining out and accommodation, RAC breakdown cover and railcards, for instance.

Other household bills may just require some quick online price comparison, such as getting a better deal on your insurance, TV package or mobile phone contract. If you’re thorough and review every last bill, you might save a decent amount of money all-in-all. It’ll take you some time, but it’s always easier than it seems and the savings will make it worth your while.

If you have credit card debt, you could consider getting a 0% balance transfer card, and use the interest-free period to try to pay it off. Of course, you should do your best to repay  the debt before the promotional period ends, and you start getting charged interest again.

Step #3: Max out your incomings

Good to know:
If you take on a lodger in a furnished room, The Rent a Room Scheme means your earnings will be tax-free, up to a threshold of £7,500. 

It’s not all about cutting back. Spend a bit of time thinking about ways that you can bring more money in. Depending on your situation, you may find that there are opportunities to increase your income.

Could you apply for a promotion at work, or request more overtime? Do you have boxes full of things you never use, which can be sold online or at a car boot sale? Any potential contributions to your savings pot will be helpful, and all add up over time.

Are you able to take on a lodger? If you have a spare room in your property, giving it a lick of paint and then renting it out is a great way to make it work for you.

If you have a major savings goal, you might also consider bigger steps, such as moving in with parents, family or friends temporarily. Even just a few months could save you a decent sum. Alternatively, you could spread costs by renting with housemates.

Step #4: Stick to your goals

Once you’ve drawn up a budget and set your goals, it’s important to stick to them. Don’t forget that this is the blueprint for realising your financial ambitions, after all. You could set a monthly or quarterly budget review, for instance, to see if you’re on target. If you are on target, make sure you take the time to recognise your progress. 

If you want some help with staying on track, there are plenty of good budgeting apps out there, which you may find invaluable. And by using open banking, these can – with your permission – plug straight into your bank account, making your life much easier.

With a bit of discipline and determination, you’ll nail this. Good luck!

Are you a first-time buyer looking to save for a deposit? You can find more tips and resources for saving for your first home here.

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