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How to get financially fit in the New Year

Whether or not you’re into resolutions, a new year can be a good prompt to start making more of your money.

From getting a clear view of your current financial position to setting goals for the future, here are some steps to help you get started. 

Get your financial fitness score

Look back at how the last year went and ask yourself:

  1. Did I reach any financial goals I set?
  2. Was I able to save as much as I hoped?
  3. Did I reduce any debts?

Taking an in-depth look at your finances can help you see where to make any changes for the upcoming year. Our financial fitness tool will give you a score and tell you how you compare to others like you. Just answer a few questions to find out where you stand and the steps you can take to improve your financial position.

You can also use this information as the basis for creating a budget for the coming year. Our budget planner can help you organise your spending, and let you see where you could potentially make changes or plan for any big expenses.

Explore: 9 steps to financial fitness

Assess your accounts

Are you happy with your current account? And if you have a credit card, does it still suit you? If not, now could be a good time to think about switching or cancelling any unused accounts. There are often good deals for switching, so look around to see what's on offer.

Before you jump into anything, make sure you look beyond any introductory deals and at the full terms and conditions. For example, if a credit card offers 0% interest for the first 6 months and then the interest rate dramatically increases, it may not be the best option. 

It can also be worth looking at your broadband, and utility suppliers to make sure you’re happy with the rate you pay. Comparison websites may be able to help you tell whether you have a good deal.

Explore: Switching current accounts - what you need to do

If you have different credit cards, loans and any other forms of lending, you may want to take some time to look at your repayments and how you’re managing them. Would a debt consolidation loan help reduce monthly payments? If you’re considering this type of loan, it’s important to check how it will impact your total repayment amount. You may end up paying more in interest if the loan has a longer repayment term. 

Explore: Ways to borrow

Set yourself a goal

Where do you want to be by the end of the year? You may want to:

Once you’ve set your goal, break it down into small steps and keep it front of mind. This can mean setting yourself milestones to reach by the end of each month and even doing something as simple as sticking a reminder on your fridge.

Be realistic. You don’t want to get 2 months in and feel like there’s no chance of reaching your target.

Explore: How to make the right financial decisions

Build your savings

No matter what your goal is, building up your savings will likely help you achieve it. If you’re focused on clearing some debts, saving can be the next step once that’s done. 

It can be helpful to have a separate place to store your savings, so you’re not tempted to dip into them for your daily spending. 

If you have a savings account, it may be a good time to consider whether it’s working for you. If you don’t have one, it could be a good time to think about setting one up.

The right kind of account for you will depend on your circumstances and goals.

Explore: ISAs vs savings accounts: What’s the difference?

Once you have a separate place to keep your savings, try paying yourself first. You can set up a standing order so this happens each time you get paid without you having to lift a finger.

Again, this helps remove any temptation to spend your savings.

Think about the long term

It’s never too early to start thinking about the future. It’s great to have goals for the next year, but what about beyond that? Perhaps you’d like to buy a property, start investing, or prepare for life beyond work

Even if these goals feel a long way off, it’s worth trying to picture when you’d like to achieve them and put steps in place to get you closer. 

If you know somebody who’s recently bought a property or started investing, it may be a good idea to have a chat to them to get some tips. Everyone’s experience is different but the more you know, the better placed you’ll be.

Explore: Planning for the future