Money Mensch: New Year resolutions for a more profitable 2014
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For most people, taking a deep breath and sorting your finances could lead to the equivalent of a 25 per cent pay rise in just one day. To help, here are my suggestions for the top 10 New Year financial resolutions:
I resolve to budget
How much do you earn a year? Easy question. And how much do you spend? Errrr... Spend more than you earn and you're either building up debt or eating up savings. It's crucial to know if your finances are balanced, and this is the time of year to assess them. Yet most budgets are worthless, due to some failings.
● You need to look at more than just a month's spending. This misses out costly spends such as Christmas, summer holidays or even a sofa bought every few years. These need factoring in.
● Look at the little picture, not just the big one. Don't just guess an annual "motoring" cost, for example. Include car insurance, MOTs, petrol, breakdown cover and repairs, each as individual items, and check back bank statements.
The next step is to try to stick to the budget. To do that, the easy self-discipline trick is "piggybanking"
Here, you set up separate bank or savings accounts for things like bills, holidays and Chanucah. Each month, you place the requisite cash into them. Then when it comes to spending, if it's not in that account, you can't afford it.
I resolve to stop energy companies overcharging
All the big energy providers have now hiked prices, which means it's now mostly a level playing field if you do a comparison. Some people are able to cut costs by £200 and guarantee no price hikes for a number of years by getting a cheap fixed tariff. Just ensure it has "no exit penalties".
To find your cheapest, don't just speak to your existing provider. Use an Ofgem Confidence Code comparison site.
Do remember though, if a comparison site says you'll save £200, that's compared to the post-hike prices, not what you were paying, so don't budget on reducing your actual bills by that much.
I resolve to stop my car chugging so much fuel
The biggest possible petrol savings come from changing driving habits - which can cut up to 30 per cent off your fuel use.
Think of your car's accelerator as a money pump. The harder you press it, the more you spend, so speed up more gradually. Change gear up sooner and use road positioning and attentive driving so you break less and roll to a stop more.
I resolve to start sorting next Chanucah NOW
January is the perfect time to plan Chanucah, so you can have more and pay less. Grab gifts and Chauncah cards while they're heavily discounted in the sales, and store them for next year.
Then start saving for Chanucah (or budgeting as in the first resolution) now. Far too many people do lust lists which, if you haven't saved, leads to debt or disappointment. Far better to put cash aside each month now, rather than borrow then pay each month afterwards plus interest on top.
I resolve to become a diary expert
It's one of the most powerful financial resolutions you can make. Good diary skills are a key part of keeping costs down, as many consumer and financial products give you a good deal for the short term, then whack up the cost after a time.
So check now when things end, and put a note in your diary a month before the crucial time, so you've time to switch to a new cheaper provider.
This includes monitoring:
● When bonus interest on your savings accounts end
● When your mortgage fix or discount ends
● When your fixed rate energy tariff ends
● When your mobile contract is up
● When your broadband, home phone or digital TV contract is up
● When your credit card's 0 per cent period ends
I resolve to reclaim
If you're short of cash, it's time to see if any has been unfairly taken from you. l Had a loan, credit card or mortgage in the last 10 years? If so, you may have been mis-sold Payment Protection Insurance. You can reclaim without paying a company to do it.
● In the wrong council tax band? You may be one of 100,000s who are in too high a council tax band. You can get your band lowered and a backdated payout, which for some is £1,000s.
● Wear a uniform to work? If so, and you have to wash, repair or replace it yourself, you may be able to reclaim tax - both for this year and for up to four years back.
● Pay for your bank account? If you pay a monthly fee for a "packaged bank account", then check you're actually getting value from it. If not cancel it.