Money Insider: Go back to basics to sort out your finances
Friday 17 January 2014
Many people will have made a resolution to reorganise their money matters this year – it's probably one of the top three 2014 promises, alongside shedding a bit of weight and doing more exercise.
With the Christmas credit card statements set to arrive shortly around the same time as the big winter gas and electricity bills, it's not surprising that people are concerned about getting their finances back on track at this time of year.
But as with dieting and fitness, getting to grips with your finances isn't a five-minute job and requires plenty of self-discipline, as well as being prepared to accept a little discomfort along the way.
Just telling yourself that you need to be better with your money and a bit more careful with your spending isn't going to be enough to turn your fortunes around and rid yourself of those nagging debts; it's all about going back to basics and adopting a new mind set – and a structured plan.
If you don't already do so, it's a good idea to get a box file to keep all your financial statements and information in one place where they're easy to lay your hands on.
The first step is to look at exactly where your money goes, for that you'll need to go through your last six months' bank and credit card statements.
Compile a monthly budget (by hand or on your PC) and list everything that you currently pay out; crucially, don't forget to include a contribution to those annual bills such as the MOT for the car, holidays, birthdays and Christmas.
Once you've got the list in place, review each item in turn and ask yourself two questions: can I manage without it? And can I reduce the amount I'm paying? For some items, such as gym membership, dental insurance and magazine subscriptions, it could be as simple as cancelling your standing order. But at the other end of the scale, when it comes to things such as council tax, you just have to bite the bullet and pay up.
With your mortgage, gas, electricity, water, telephone and broadband payments, consider ways of reducing your costs, either by switching provider, changing your tariff or, in some instances, by trying to cut down on your consumption.
For example when your renewal comes through for your home insurance and car insurance don't accept the new premium without carrying out a quick search on a comparison website. I'd be surprised if you can't find a cheaper deal and when you do, ask your current insurer if they will match the lower price; if they won't, simply take your custom elsewhere.
You may only be saving the odd £5 or £10 per month here and there, but the cumulative impact of these cut backs could end up making your monthly budget much easier to manage.
Another essential exercise is to identify where your cash goes. While your list of outgoings details your standing orders and debit and credit card payments, it doesn't show where that £50 or £100 from the ATM is being spent.
Carry a notebook with you or use your smartphone to record everything you spend over the course of a fortnight. It's a real eye opener and can help you identify where to cut back and make some quick savings.
Only when you've got a grip on where your money goes can you start to improve matters by using the cash you've freed up to start repaying your most expensive debts.
It's not a particularly exciting job and a financial makeover requires effort and willpower but, much like losing weight or getting fitter, the rewards mean the effort will be well worth it in the long run.
Andrew Hagger is an independent personal finance analyst from www.moneycomms.co.uk
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
- 1 iOS 8 apps and features: eight iPhone settings you need to look at after you install the update
- 2 Kim Kardashian 'nude photos' leaked on 4chan weeks after Jennifer Lawrence scandal
- 3 'F*ck it, I quit': TV reporter Charlo Greene quits live on air in spectacular fashion
- 4 Scotland could still declare independence – even without referendum, says Alex Salmond
- 5 Hitler’s former food taster reveals the horrors of the Wolf’s Lair
Scotland could still declare independence – even without referendum, says Alex Salmond
Scottish referendum results: Cross-party consensus collapses amid Tory-Labour spat on the 'English question'
Hilary Mantel 'should be investigated by police' over Margaret Thatcher assassination story, says Lord Bell
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Plebgate MP Andrew Mitchell called officer a 'little s**t', claim court documents 'exposing ex-Chief Whip's 'record of abusing police'
Archbishop of Canterbury admits doubts about existence of God
iJobs Money & Business
£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...
£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...
£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...
Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...
Day In a Page
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize