New year, new finances

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With the expensive Christmas and New Year period out of the way, you might have that gift you have always wanted… but chances are you are feeling a little short on the pennies.

High street and online retailers might have had a field day over the festive period with borrowing rising sharply in 2015, but that means more of us are seeing in the New Year in the red. By following these simple tips on how to change the way you spend and save, you could be back in the black before you know it and that dream exotic holiday in 2016 might just be possible after all…

Manage your money

You can’t be expected to save any money if you have no idea how much you are earning and spending every month. The New Year is the perfect opportunity to sit down and go through your most recent food bills, utility bills and wage slips to work out how much money you are left with. Then you can look at your online bank account statements for the last three months to find out what other expenses you have over the average month. Do you tend to spend a lot of money on clothes? Or perhaps it’s expensive meals out with friends? Once you know exactly what you have got coming in and going out you can take action to cut back on your expenditure.

The internet is your friend

All of the best advice and cheapest financial deals can be found at just the touch of the button on the internet. The government-run Money Advice Service provides free, impartial advice and guides to help you successfully manage your finances. There is a step-by-step action plan to help you stretch your money further which includes tips on keeping a spending diary and drawing up a budget. There is also a free budgeting tool on the Citizens Advice Bureau website which helps you work out how much money you have available to pay off debts and then start saving.

Be app-y

Another good way of tracking your finances is by using an app on your smartphone or tablet. These require you to log all of your expenses and then they provide advice on how to make savings, however small, along the way. You do not need to splash out on an expensive app as there are plenty of good free ones out there.

Shop around for fuel

One of the biggest household expenditures is on fuel, with the average gas and electricity bills totting up to £1,500 every year. Household bills have followed an upward trend in recent years but that does not mean that you need to be ripped off. Once again, use the powers of the internet to shop around and see how much you could save by switching to an alternative utility provider.

Cut the morning coffee

Once you have worked out your finances, you’ll start to notice costs that are not necessary, such as that regular morning coffee from an expensive local café or buying your lunch every day instead of making your own packed lunch. If you add up these small costs up across the year, this can amount to hundreds of pounds. In fact, figures from ThisIsMoney.co.uk show that a third of people spend more than £100 every month on lunch, which mounts up to over £1,200 each year. That would buy you quite a nice holiday!

Shop wisely

Another huge expense for many households is the weekly grocery shop. The simplest way to cut down costs on this front is to plan meals in advance and write a shopping list so that when you go food shopping, you only buy what is on your list. Try not to be tempted by all those sweet treats you really do not need. Look out for deals at your local supermarket, but better still; buy local. By getting your food from the butcher and greengrocer, not only will you potentially save money, you may also be eating fresher produce.

Some other ideas for saving money include walking, cycling or taking the bus to work instead of driving, giving up smoking, and even cancelling your expensive gym membership and going running or setting up a home gym. Once you start putting your mind to it, you will find that there are dozens of ways you can save cash – and if you do it wisely, you will not feel like you are missing out on the things you enjoy.