Four good money habits to start in 2019

One of my favourite things about the New Year is writing out my resolutions and goals for the coming 12 months – and then looking back on them in December to see what I actually achieved. I tend to be a bit OCD and organise my goals into themes – anything from health to professional goals, and even finance.

Last year, one of my money resolutions was to cut back on my Starbucks addiction in the hopes of saving some ‘extra’ money. Everytime I walked by a Starbucks without going in, and every time I brought my coffee from home, I would put a little tick in my phone notes to remind myself that I was saving. Even though I didn’t cut out my vanilla latte’s completely, I did save over £300, not to mention the calories I didn’t consume. Just think how much I could save if I kicked my habit completely!

In honour of my tradition, I’ve come up with four good money habits to help start your new year on the right financial footing.

‘Take a leap of faith and begin this wondrous new year by believing’ – Sarah Ban Breathnach, author and public speaker

 

1. Review your budget

Start afresh by setting real and clear goals for 2019. It doesn’t matter if that means updating last year’s budget or coming up with some new goals, just so long as you do it. To get the maximum impact, work backwards – starting with your biggest expenses, and leaving the smaller costs like morning coffees towards the end – to see what you can cut back on.

This is a good time to look at all those subscriptions on your bank and credit card statements as well. Cancel any you are not really using or you could do without and think about putting that money towards something else (and maybe just jump ahead to number four).

Once you’ve settled on your budget, set a google calendar reminder once a month to review it, because circumstances and priorities can change. If you’re living with a partner, I suggest reviewing your household budget together so you’re both on the same page.

 

2. Check in with your emergency fund

Just as circumstances can affect your monthly budget, they can also take a toll on your emergency fund. The new year is a good time to have an honest look at what you have put aside. Have you moved house recently and are paying more rent or have a new gym membership on direct debit? If you have, will your emergency fund still cover three to six months living expenses should you become ill or lose your job?

If the answer is no, then make sure replenishing your emergency fund is a top priority when designing your budget. I mean, do you really need HelloFresh or Birchbox delivered every month?

 

3. Refinance your loans and manage your debts (if you have any)

Refinancing or consolidating debt can help save on repayments and take the potential strain out of your monthly budget. Get up to date statements so you know exactly where you stand. See if you can switch providers to get a better deal or even consolidate for lower monthly payments. Better yet – pay them off early, if you can!

Remember, if you do refinance to get lower monthly payments that doesn’t mean your debt isn’t there. It may just mean you’ve spread it out over a few more months to lessen the payments. So please don’t take on an unnecessary debt throughout the year because your expenses are less. If you can’t afford the holiday in cash – don’t take it. Don’t try to keep up with the Jones’ if it’s going to max out your credit card for the next six months. The instagram shot is not worth it, believe me.

 

4. Start investing

Hopefully, by now I’ve convinced you to at least consider investing and what better time than a new year? 365 blank pages and all that. Try starting with something small, say your morning coffee, and work your way up from there.

So humour me, take a second look at your budget, I’m sure you can find at least £50 a month to transfer to your ISA. Trust me, before long you won’t even notice it’s missing and maybe, this time next year, when you’re reviewing your budget again, you can find another £20 a month as well.

The views of the author and any people interviewed are their own and do not constitute financial advice. However the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions. Before you make any investment decision make sure you’re comfortable and fully understand the risks. If you invest in fund or trust make sure you know what specific risks they’re exposed to. Past performance is not a reliable guide to future returns. Remember all investments can fall in value as well as rise, so you could make a loss.