As we enter 2022, 21% of Brits who say they will make a new year’s resolution, will do so in relation to money. After indulging throughout the festive period, many will see January as an opportunity to cut back on their spending, set a budget, and start saving. If you’re planning on doing the same, you’re not alone. Here are some tips on how to create and stick to a well-planned budget.
Reassess your current budget
You may already have a well-thought-out budget, a rough idea, or nothing at all! Whichever category you fall into, it is always important to re-evaluate and update your incomings and outgoings. Make sure to account for all your expenses, from taxes to your Spotify subscription – it’s those unexpected payments that really take us by surprise. By having your income and expenses mapped out side by side, you can see what unnecessary costs might be, when you can cut back, and periods where you will have to fork out the cash more often (e.g., your partner’s birthday). You can see what is and what isn’t working and update your budget accordingly.
Reach your goals
Setting yourself clear financial goals is the first step to reaching them. You may simply want to stop cutting back in a certain spending category, or you may be aiming high and saving for a house. To account for all goal sizes, it is important to create goals monthly and yearly as reaching them will provide you with a great sense of accomplishment that will motivate you to carry on saving. However, goals don’t always have to be about saving. This year, you may simply need to repay debt and in turn, become more money-savvy. On the other hand, you might have goals to retire but are struggling with your finances. In this case, selling your life insurance policy might be the best option to retire comfortably.
Shop sales wisely
Year in year out, many Brits fall victim to the January sales, with a lot of “deals” not being that at all. In the bleak winter, it is easy to engage in some retail therapy to escape from the dull reality of the new year. However, overspending on post-Christmas sales can have an adverse effect by setting you back financially before the year has even begun. Watch out for scams and clever wording, but most importantly – don’t buy anything you don’t need just for the sake of it. If you set a clear budget, you can enjoy the January sales without all the guilt later.
Don’t feel discouraged
When trying to improve your financial management it’s easy to be extremely hard on yourself, especially when it seems like everyone around you has no debt and is investing in big projects. Remind yourself that everyone at some point has dealt with money problems, and it is not a reflection of you as a person. If you are really struggling, do not feel any shame in taking out a bad credit loan to tide you over and support yourself. Although you may look at yourself next to friends and family and feel comparatively behind, remind yourself that simply recognizing your financial state and being aware of what needs to be done to manage it is already putting you in a better position than many others.
By following these tips, you can draw up the perfect budget which isn’t too restrictive, but will help you reach all your financial goals in 2022, no matter how small or big.