Seven new year’s money resolutions for 2019 that you won’t give up
Resolutions that are easy to make, easy to keep and easy on your wallet or purse…
Have you ever made firm financial plans only to have spectacularly failed by the second week of January? Have your aims to budget, clear debt or save for that Important Big Purchase simply fallen by the wayside along with plans to run a marathon or learn fluent Spanish?
You’re not alone if that’s the case. Research from Ford Money shows that only 22 per cent of people actually kept their new year’s resolutions in 2018.
And a lot of those broken resolutions were financial; after health and wellbeing, saving money was the second most popular resolution last year. But 70 per cent of those money resolutions were broken.
So this year, we’re not going to write about the 10 resolutions that could totally transform your life if you’re willing to totally transform your life. Instead, we’ve found some of the most achievable financial resolutions so you won’t give them up.
Save an achievable amount
Forming good habits takes time, so if saving up an emergency fund or nest egg is your goal then break it down into achievable chunks.
Suzanne Lewsley, chief deposits officer at Ford Money, says: “Make sure the goal you set is realistic, but the approach you take is too. For example, start low and aim high. You risk feeling disheartened and this could increase the likelihood of you giving up if you have to lower your goal.
“Start by saving just £50 a month and review your progress monthly – if you have money to spare at the end of the month then put it towards your goal and up your monthly target. Remember that saving £50 is better than £0.”
Use more cash
It’s horribly easy to go days without using cash now that everywhere accepts cards and many payments are simply contactless.
But maybe spending shouldn’t be so easy. There’s plenty of anecdotal evidence that paying real, actual money for items registers with our minds more than breezy card payments, so make 2019 the year you use real world money more.
You might find you spend less because it’s easier to keep track of what’s going out.
Make your savings automatic
Saving money is hard because there is always something more fun to do with cash than stash it in a savings account. Actively saving cash each month is hard.
But if you automate those savings then you won’t even have to think about it, the money will just leave the account. Leaving it alone is easier than setting it aside.
You might decide to do that by setting up an automatic transfer from your current account to a savings account on pay day. Or there are apps that save regular affordable amounts from your account, based on an algorithmic analysis of what you can afford.
Other apps, including Monzo and Money Box, round up your purchases to the nearest pound and then save the pennies into an account. Over time, it really adds up.
Get to grips with Open Banking
Those money saving apps rely on Open Banking, a new rule that means your bank has to share your data with regulated financial companies if you ask it to. That means you can get real value out of your own information.
With Open Banking you can get your finances under control and make your life easier at the same time. There are apps that show all your financial products and spending on one dashboard, for example, that mean you have greater knowledge and control over your spending.
Save half your windfalls
Lewsley has a tip for making saving any extra cash achievable. She says: “We all like to treat ourselves when we receive an unexpected burst of cash; whether it is a gift, a fee for a referral at work, a tax rebate or a pay rise.
“However, a good way to work towards your resolution is by going against instinct and splitting it 50/50 between spending and saving. For example, try putting half (or more) into your savings account or ISA and use the leftover to treat yourself. By giving yourself a small reward, you will be less likely to break your resolution in the longer term.”
Switch your bills automatically
One great financial resolution is to shop around more for your household bills, because it’s an easy way to save hundreds of pounds a year.
But that is probably one of the first resolutions to get dropped because people forget or find it dull or just never get around to it.
For energy bills at least there is one simpler way to do it with minimum effort. Several companies, offer automatic energy bill comparison and switching.
For example, Look After My Bills and Gocompare.com’s WeFlip service both pledge to keep customers on the best deals and to automatically switch them when those deals run out.
Don’t opt out of auto-enrolment
If you’re an employee then you will almost certainly have been enrolled into your employer’s pension scheme in 2018 or 2017. Employees are allowed to opt out but then they don’t get the pension contributions made by their employer either, so it’s a really good idea to stick with it.
However, so far the contribution has been relatively low; employees pay 2.4 per cent of their salary, employers top it up with 2 per cent, the government adds 0.6 per cent and you end up with 5 per cent of your salary saved into a pension.
But from 6 April 2019 there will be a hike and employees will automatically begin paying 4 per cent of their salary. That will be topped up with 3 per cent from your boss and 1 per cent from the government, making an effective pensions savings rate of 8 per cent of your salary.
Some analysts are concerned this will be the true test of whether auto-enrolment is working as many people may begin to notice they have less cash in their accounts at the end of each month. For example, someone earning around £27,000 who pays the auto-enrolment minimum will see their personal contribution jump from around £500 in 2018 to more than £850 in 2019.
But it’s a really good idea to resolve to resist the urge to opt out.
Tom Selby, senior analyst at AJ Bell, warns: “While for most people this is still not enough to enjoy a comfortable retirement, we are now getting to the stage where some reluctant savers could start to feel the pinch. Rising average pay during 2018 should help ease the pain, but anyone missing out on a salary hike could well be tempted to prioritise spending today over saving for tomorrow.
“Anyone thinking of quitting their workplace pension needs to understand that they will be losing out on both tax relief and their employer contribution, which put together double the value of the money they put in. Put another way, opting out of your pension is a bit like taking a voluntary pay cut – so nobody should do it lightly!”
So there you have it. Seven key resolutions that require minimal effort to keep but could help you kickstart a year of financial security and wellbeing.