New year’s resolutions don’t always last. But giving your money a quick health check in January can help you to smash your savings goals for the year ahead! If you are asking yourself how to save money in the new year, look no further! Loqbox has 10 easy tips to get your money (and your financial wellbeing!) on track in the new year.
Your pockets take a big hit in December with a month of costly festivities (or even more if you’re a “Christmas starts in November” type). And then January seems to be the longest month of the year! That’s often because payday comes early for Christmas. So you’re running on fumes by the time the next one lands, don’t panic! Loqbox helps you get your new year started on the right foot.
10 ways to save money in the new year
1. Make a new year’s resolution to save money
The first step to successfully saving in the new year is to set yourself a realistic and achievable savings goal. What are you saving for? A mortgage deposit, a big holiday, preparing for a baby? Set targets within your means so you don’t lose motivation. Break down your goal into affordable chunks so it won’t take forever to reach.
To work out a realistic savings goal use the 50/20/30 rule. Break your after-tax income into three sections. 50% for what you need (rent, mortgage, bills), 20% for your savings goal, and the remaining 30% for what you want (luxury, lifestyle, fun).
Divide your savings goal by 20% of your income to work out how many months it will take. You can read more about budgeting rules and managing your personal finances here.
Once you’ve set your savings goal you can even use it to build your credit score at the same time by getting started with Loqbox Save. We will report your monthly savings payments to the three main credit reference agencies (CRAs) in the UK: Experian, Equifax and TransUnion. Read more about CRAs here.
2. Pay off expensive debts first
Before you get started on your savings goals you want to make sure you have your debts in good order. This is because the interest that you pay on your debts often far outweighs the interest that you can make on your savings accounts. Where your savings might generate something in the region of 0.3% interest, your credit card debt could be accruing 30% every month.
So by paying off your expensive debts first you’ll be making longer term savings. If you can’t pay off a credit card debt quickly, maybe move it onto a 0% balance-transfer account. This will give you some time to pay off the debt without adding any interest. Be careful though, the interest rates will always jump up after the agreed amount of time.
If the money you owe isn’t on a credit card or if you have several debts, you may want to consider consolidating them. Not only does this give you a clearer view of your money it simplifies your repayments (which means you’re more likely to get them right!). You need to keep an eye on the interest when you consolidate your debts. While it can reduce the number of overall payments, it can also increase the amount that you’re paying if you’re not careful.
3. Check your tax relief entitlements
It’s possible to increase how much money you’re able to put towards your savings goal by growing your after-tax income. You can do this by making sure that you are benefitting from all of the tax relief you are entitled to.
You’d be amazed how many people miss out on these benefits. You could be eligible for tax credits or a marriage allowance. You can also reduce your tax by paying into a pension scheme or avoid tax penalties by meeting tax return deadlines.
Check your tax code and find out where you could be saving money or taking home more money after tax. Or use the government benefits calculators linked here.
4. Use price comparison websites to get the best deals
Price comparison websites are a great way to cut through all of the noise and find the latest and best deals. We also find that apps like Snoop are really helpful for finding yourself better deals.
Organising your bills can be super boring so it’s easy to ignore them. But streaming subscriptions, internet contracts and other services are very competitive and offers change all the time. Even switching your bank account can earn you some serious money!
Take the time to check in with price comparison sites as often as you can stomach switching up your service providers. It’s really worth it! You could save a lot of money. You can then pass those savings directly into your savings, giving it a boost without even feeling it in your pocket.
5. Check your mobile phone contract plan
People often end up paying more than they need to on their mobile phone contracts. Check your package against your usage. If your usage is higher than your phone plan you could be overpaying for the additional minutes or data. If you’re not getting close to using up your plan you could save by getting a much cheaper deal.
6. Use loyalty cards for regular purchases
Look at your bank statements to work out what you pay for regularly. Is there a supermarket you always do your weekly shop at? Do you visit any particular shops frequently or eat out at the same places? A lot of places will offer rewards to returning customers. Could you be saving by signing up for loyalty cards?
Take a look at your regular haunts and see what they have to offer. Or you can start by working out what places offer the best rewards and choose to switch to them! The savings may not be huge on their own, but it’s amazing how quickly your regular expenses build up.
7. Check your direct debits and subscriptions
It’s easy to forget you’ve got direct debits running for things you no longer use or need.
Keep an eye on your incomings and outgoings. It’s usually easy to see what money is leaving your account every month. With online banking, you can often cancel old payments at the touch of a button..
TV, film and music streaming subscriptions often clutter bank statements and can add up to lots of money every month. How many are you paying for, when was the last time you used them? Could you save by signing up for a family plan instead of individual accounts? If you really want to reach your savings goals, it's good to streamline those streamers!
8. Use the 30-day rule
The 30-day rule is a great way to work out whether you should buy something or not. It’s really easy. Before spending money, ask yourself if what you're buying is essential. That means it's something like mortgage or rent, food or utility bills. If it isn’t, don’t buy it. Wait 30 days instead.
If you still want to buy it after 30 days then go for it. You’ve proved that it’s worth the money! It’s incredible how much stuff we think we need that we really don’t. The 30-day rule lets you separate unnecessary impulse purchases from the things that will actually benefit your life.
Another savings hack is to buy own-brand items at the supermarket rather than recognised brands. With bigger brands you’re often just paying for the advertising budget they use to let you know they exist. Supermarket own-brand products can be just as good quality but cost a lot less. Maybe take a taste test with one of each to see if you can really tell the difference? You might be surprised!
9. Use budgeting apps
Keeping a regular eye on your finances is key to finding the little things that make a big difference. Having your online banking at your fingertips makes it so much easier to stay on top of your money.
You can also find loads of financial and budgeting help by using apps like Plum. Whether you want to digitally set and track your savings goals or separate your regular income and outgoings into manageable ‘jars’, there’s an app that will make your life easier.
10. Build your credit score
Often, higher your credit scores will get better offers from lenders when you apply for credit. The less you pay in interest the more money you’ll ultimately have in your pocket. And growing your credit score can save you £1,000s on mortgage, loan and credit card interest payments.