It can be hard to know where to start with personal financial resolutions. There is so much that can potentially be overhauled, from reviewing whether you are on the best mortgage rate to finally getting round to writing a will, to simply shopping at a cheaper supermarket. Generally, most of the below amount to money versions of “face your fears” and “make the time to do it”. Here are my 20 money resolutions, for 2020:
1. Get out – and stay out – of my overdraft
I have, in the past, been quite bad at using my overdraft as if it is actually my own money rather than the bank’s. I am in a position now where I don’t need to use my overdraft and I am mercifully, out of it. It is tempting though, especially when there are so many sales on, and some things I would quite like to buy that would require me to go into it again. But interest rates on overdraft borrowing are high and can really add up over time. Someone borrowing an average of £1,000 a month on an overdraft that charges 18.9 per cent will pay £189 in interest over the year.
From April, all banks have to be clearer that an overdraft is a form of credit. Some might end up charging more to customers who use their overdraft. This means that people who use it every single month could end up worse off this year. There has never been a better time to make “getting out – and staying out – of an overdraft”, a top priority.
2. Check my energy account balance
If you pay a fixed monthly amount for gas and electricity that is based on an estimate of your energy consumption by your provider, it’s possible you might have been overpaying and you could have an unnecessarily high in-credit balance (the opposite is also possible and you could find out you actually need to increase your monthly payments). If you do find you have a higher balance than seems necessary, contact your energy supplier about a refund. That money could be sitting in your account rather than theirs, earning interest for you, rather than your provider. It’s usual to have a higher in-credit balance at the start of winter, when you will use more energy, so a good time to check is at the end of winter, when your energy usage starts to go down again.
3. File paperwork properly
It’s a hard one to stay on top of in a digital world, but some bits of paper, like insurance and pension documents, are worth looking after. I realised the other day that I had completely forgotten where my income protection policy details were. Then I realised that I don’t think my husband would be able to find our wills, my pension or life insurance information if something happened to me, apart from knowing vaguely that they are in the filing cabinet. One of my resolutions is simply to know where important financial documents are – and to make sure my husband knows too. Buy some plastic wallets, lever arch files and file dividers and spend a rainy Sunday afternoon sorting your prime paperwork.
4. Stop opening ‘discount’ and ‘sales’ emails
Many a poor spending decision has begun with a weak moment of opening an email from a retailer (usually a clothing or furniture one) on the premise of ‘40% off’, then buying things that are actually only 10% off once on the website. This year, I refuse to be sucked into discount emails. I will have a list of items I need/ want at the beginning of every month, along with a maximum price to pay, and will not veer from this list to make random purchases simply because it’s discounted.
5. Only buy things on offer
Equally though, if you do need something, scour voucher codes websites, browser add-ons, rewards schemes you might be a member of and any other source of deals you can think of before committing to a large purchase. There is almost always some money off to be had somewhere.
6. Build up emergency savings pot
Nothing says ‘grown-up’ like having £10,000 just sitting there for a rainy day. Having just emerged from the early years of having young children and childcare bills, which coincided with moving house twice, it’s perhaps not surprising that, while I have other savings pots, like holidays, kids ISAs, etc, I do not have this one. Can I hit £10,000 additional savings in one year? It’s technically possible, but will require disciplined spending on high value things, like furniture and holidays.
7. Save 20 per cent of net income EVERY month
There’s something called the 50/30/20 rule, which is designed to give you a rough idea of how much you should be spending on essentials, how much on non-essentials and how much you should save. Around 50 per cent of your net income is for essential outgoings such as mortgage or rent, energy, water, council tax, debt repayments and other utilities; 30 per cent is for ‘wants’ spending, like holidays, clothes and gym memberships and 20 per cent should be saved. A resolution could be to work your own monthly finances out according to this rule and then stick to it religiously for a year. I am going to get more religious about it than I have been.
8. Take more advantage of the things we are already paying for
Gym membership and National Trust membership – two things that are drastically under-used in our house, and yet I am reluctant to give them up. For one thing, that gym membership includes free family swim sessions, which my kids love. I resolve to go twice a week instead of once. And the National Trust membership is brilliant for blank Sunday afternoons near where we live, we just constantly forget we have the cards. Rather than ditching these subscriptions, which I still think are good value if we use them, I’ll leave the cards out somewhere prominent in the hallway, so we take greater advantage.
9. Cut down the food shopping bill by 10 per cent
I am pretty good at efficient food shopping already. I go for offers and we don’t waste much. But I could get cleverer here with batch cooking and examining the freezer more frequently. We spend about £130 a week on food (a family of four, including a dog). If I could get this down to something more like £115, that’s nearly £800 saved over the course of the year.
10. Stop getting ripped off – pick up the phone
So many things slip through the net because I am too busy to chase companies up and hold them to account for items not received as described, bills (like mobile or broadband) that seem too high and go up for no reason. Often, the reason I don’t call up to query things is that the phone call takes a long time; involves being put on hold for a long time and can mean confrontation, which, let’s be honest, no one likes. I am going to make time to make a nuisance of myself this year, in situations where I feel I’m not getting good value. I’ve been far too British in the past and it’s time to change.
11. Switch my mobile and broadband deals
Now I know I could get cheaper mobile and broadband deals. It’s a nightmare trying to work out exactly how much over the odds I am paying though. I hate haggling. Why should getting a new contract feel like a visit to a Moroccan souk? Which?, the consumer association, reckons that switching to a cheaper mobile nets the average person around £70 in savings a year. Not loads, but it’s certainly an hour well spent researching which are the best and then calling up your current provider to let them know you’ve found a cheaper deal elsewhere.
12. Stop leaving the house
OK, so this is tongue-in-cheek – I don’t actually intend to stop leaving the house. But I’ve noticed that this one activity – leaving the house – costs money every time, whether that’s petrol, a coffee, a snack or lunch while out, a parking space, a quick trip to Sainsbury’s for a loaf of bread and a pack of batteries. Leaving the house seems to cost me at least £20 a time. There are places we can go for free – walking the dog is the absolute best. But I also resolve to find entertainment more frequently within these four walls: reading a book, taking up a craft project or other pastime, or playing a game with the kids. There’s an awful lot of entertainment within our four walls that I don’t appreciate.
13. Max out the pension
This isn’t actually my personal New Year’s resolution as I already pay a decent amount into my pension, but if you don’t pay in up to at least the maximum you can to get the most “matched” contribution on offer from your employer, this is well worth putting to the top of your 2020 resolutions list. There aren’t many better ways to get free money in this life than a pension. That’s because when you pay in, you also get a contribution from your employer and another indirectly from the Government, in the form of that little understood benefit of pensions – tax relief – which means you don’t pay tax on your pension contributions. This results in a potentially very significant additional return, worth thousands of pounds over the course of your working life.
14. Overpay on the mortgage by £50 a month
If you have a mortgage and want to prioritise paying it off as quickly as possible, and you can afford to slightly increase your monthly payments, then do so. The low interest rate environment is a gift for those who want to pay off their debts more quickly. It’s unlikely to get much cheaper than this and if rates do rise eventually, you’ll be glad you paid off more of your balance while you could. An extra £50 a month would save us £2,780 in interest overall, and result in us paying off our mortgage 9 months earlier.
15. Engage in more money chat with my husband
Talking about money can be hard – there’s often a fear that it will lead to arguments, tension or unwelcome realisations. In fact, talking about money – even if it is just agreeing on priorities for the year ahead and savings goals, can be good for your relationship as well as your bank balance. It’s best to approach such chats in an open, non-judgmental way. Is there a time in the week that is good for this kind of conversation? Like Saturday mornings, or one dinner time a week?
16. Develop money self-awareness
I’ll be making more of an effort to observe how my personality, background and emotions influence my spending and saving habits. Do you start spending when you feel down? Do you avoid looking at your bank balance because it makes you depressed? Do you go into debt to keep up with the Joneses? Or did you decide long ago that you were ‘no good’ with numbers, and so ditch efforts at good money management? Looking at your relationship with money in this way can reap long-term dividends.
17. Make short, medium and long-term financial goals
Work out how much you need for each and roughly when in your life you will need it… Then create a savings “jar” (call it a pot or ‘space’ if you prefer) for each goal. For example, my short term goals are holidays, next Christmas and my kids’ birthdays; medium-term goals are deposit for a new house and deposit for a new car; long-term are retirement savings and kids’ university maintenance costs.
18. Go back to good, old-fashioned pen and paper
My phone is full of approximately one million budgeting apps, investment apps, saving apps, currency apps.. you name it, it is on my phone. But because there are so many tools at my disposal to budget with I hardly use any of them properly. You can’t beat a print out of a bank statement in one hand, plus a piece of paper and a pen in the other, when it comes to setting a budget. I resolve to go back to old-fashioned methods, rather than relying on apps
19. Stick to reducing pocket money in the event of bad behaviour
I suffer from a chronic inability to follow through on the threat to dock pocket money when my eldest doesn’t behave. But I do recognise that if I start following through, my children will more quickly learn that money is a reward for effort. For their sakes, I need to get better at this.
20. Make money my bedtime reading
It’s hardly as entertaining as crime thrillers and perhaps not as beautifully written as Booker-prize winning fiction, but the money genre has a lot of common sense to offer, in particular I want to read up on the FIRE (Financial Independence, Retire Early) movement, not least for its brazen ambition.