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Six financial resolutions you should make in 2016

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Are your finances in disarray after another bout of festive spending? If so, there’s no need to fret: we’ve put together a six-step plan to get your money back on track.

New Years resolutions

There are two particularly good reasons why now is the right time to carry out a financial health check.

Firstly, it’s the start of the New Year and most of us should be chock full of enthusiasm to get all aspects of our lives into shape in 2016.

And secondly, most people’s bank accounts and/or credit cards will have taken a battering over the recent festive period. 

So here are six simple resolutions you can put into effect today, whether it’s to get your money matters back on track or just to give yourself a much healthier financial future.

1. Start budgeting

Your finances are much easier to organise if you know what money you have coming in and where you spend it.

Putting together a monthly or weekly budget is straightforward enough and there are loads of apps that can make it very easy.

A budget will show you whether you’re spending more than you can afford to and it will also make it simpler to identify any areas where you can cut back, be it your daily latte habit or Friday lunchtimes in the pub.

2. Pay into a pension

It’s important to think about your financial future as well as the here and now.

For most people under the age of 50, the state pension is unlikely to guarantee a great standard of living in retirement, so you’ll have to make up the difference yourself.

Check whether your firm offers a company pension – almost all will have to by 2017 – and start to pay in if you can. The money you save will be added to by your employer, so if you don’t join its pension scheme you are effectively missing out on free cash.

3. Deal with expensive debts

If you are in debt, you need to work out what your priorities are when it comes to repayments.

Interest charges on your student loan, for example, are likely to be pretty low compared with an overdraft or credit card.

Find out what rate applies to each type of credit and work to deal with the most expensive debt first.

4. Put dates in your diary

You will probably pay way over the odds for the likes of home and car insurance if you allow your current provider to automatically renew your existing policy when it runs out.

Make a note in your diary a few weeks before each type of cover is due to run out and start to hunt down cheaper deals well in advance.

5. Seek out a better tariff

It can also pay to shop around for other services such as your gas and electricity deal.

If you have never changed energy provider, or last did so several years ago, you stand to save a substantial amount on your monthly bill by switching to a new tariff.

The same applies to savings in the bank: if you have money languishing in an old deposit account, check what rate you’re earning and switch to a more generous deal as soon as possible.

6. Get the best mortgage deal

If you own your home, it is vital that you pay as little as you can for your mortgage.

If you are currently in a fixed-term deal that isn’t scheduled to end for a year or two, it’s unlikely you’ll be able to remortgage. But you could consider using any spare cash to make overpayments.

If you are on your bank’s standard variable rate (SVR), on the other hand, or if your fixed-term is due to expire soon, now is the time to consider a new loan – especially with interest rates predicted to rise at some point in 2016.

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