Savings: Expert gives advice on 'crucial' ways to save money
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With January being all about new beginnings and fresh starts, it’s the perfect time to tackle finances head on and start to introduce positive changes for the year ahead. For those looking to have a money makeover in 2022, Sally Conway, Head of Consumer Communications at Shawbrook Bank Personal Loans, has shared her five top tips to get the New Year off to a flying start.
“It may be more manageable to allocate a saving goal every quarter, with smaller financial targets to meet every three months. To help, consider using a budgeting spreadsheet or a money tracking app.
Some banks provide useful online tools to keep tabs on your spending, so it’s worth seeing what your bank offers.”
Ms Conway said: “If you had a savings goal for 2021, you may want to check whether you achieved this – and if not – why not and what could you have done differently?
“As a general rule, you might want to adopt the 50-30-20 model. This suggests you spend 50 percent of your income on essentials, save 20 percent and leave 30 percent of your income for other purchases.
“To show your commitment to reaching your saving goals, why not create a ‘savings pay day’ pot every month. That means transferring a percentage of your total monthly salary straight into savings on the same day each month – treating it as a pay day to help meet your targets.”
When people have lots of different bills and direct debits throughout the year, it can be difficult to keep an eye out for a better deal.
When creating a budget, one healthy way to start the New Year is to review these monthly outgoings. With hindsight of 2021, it might be that someone is able to cancel some of their outgoings that they may no longer use or get value from.
As part of this, people may also want to review their household bills to see if switching to a different provider could help cut costs.
Managing debt, however big or small, is ‘essential’ when setting one’s financial goals for 2022.
Ms Conway continued: “Reducing or avoiding adding to any existing debt is something that should be made a priority when reviewing your finances.
“Prioritising is difficult when everything seems urgent. But it’s crucial to keep on top of your existing debts, like a credit card or personal loan, even if the balances are low.
“And if you do need to take out more credit, make sure you can make the required repayments and understand how much you’ll pay back and when. It’s particularly important to read your terms and conditions carefully and to do your research to help you choose a product that’s best suited to you and your situation.”
By figuring out priorities, people can decide the best way to get the most out of their budget.
She added: “For your financial goals, do you want to save more and spend less? Do you want to clear your debt or improve your credit score? What is important for you and your situation?
“In 2022, what do you want to achieve? Are you considering buying a new car, doing some home improvements or planning a wedding? And what can you realistically afford to do?
“Working out your goals and budget can help you to understand your finances better and plan out the best way forward.
“Once you’ve set out your New Year saving goals, making your money work harder for you and being savvy with how you get there might help you to achieve them even quicker. Whether that’s setting up a savings account, changing your spending habits or even borrowing to get that new kitchen you’ve always wanted, there’s plenty of options to help you to reach your goals.
“Making well-informed money choices as you enter the New Year can help make your money go further and taking small steps to refresh your finances can help you reach your saving goals sooner.”
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