Guide to improve your finances in 2023
New research has discovered that money worries can increase the risk of serious health problems by up to 30 per cent, making it evident that getting your finances in order could be hugely beneficial for your wellbeing, especially at the start of 2023.
The arrival of the new year brings with it new goals, and if yours is to manage your money better, achieving this could be easier than you think, even during the cost of living criss. Nearly two-thirds (64%) of people give up their resolutions within a month of making them, but by implementing small changes each month, you can remove some of the stress, improve your finances and find yourself more in control of working towards your objectives.
To help you get started, Katy Simpson, personal finance expert at Virgin Money, has shared six tips to help give yourself a New Year money makeover.
Katy explained: “The start of the New Year is the perfect time to reassess your financial position and begin budgeting and planning for the year ahead.
“We hope that these expert tips will help people feel more optimistic about their finances in 2023, and enable them to start the year empowered with some new ways to tackle spending and saving.”
January - Build a budget
Kay said: “January can be a challenging month for finances, largely due to the Christmas financial hangover. However, this also means that it’s a great time to tighten the purse strings and prepare for the year ahead.”
She suggests starting by evaluating your current spending by checking bank statements for regular outgoings. You can then build a budget which allows you to free up money to pay off any outstanding debt, while also setting money aside for savings where possible.
Kay warns: “January is also a time to spot areas where you might have spent more than you expected. Inflation and the cost-of-living crisis is making money tighter for many, so be mindful of this and be prepared for your 2023 budget to look different to the previous year.”
Kay suggests making the most of the tools available with your current bank account to help you budget. Most are available through your mobile banking app, and they will help you identify where you might be overspending, so you can then set budgets and check your progress.
February - Learn to love saving
The start of the year is also a great time to plan ahead and save for upcoming goals like a weekend away, saving for a house deposit, or having enough for an unexpected emergency.
Kay added: “Once you’ve planned your budget, work out how much you can realistically put aside each month. Don’t overstretch yourself - little amounts will all add up over time. Just make sure you set up a monthly direct debit to your savings account, as you’re more likely to spend it if it’s left in your current account.”
And don’t be afraid to experiment with different methods of saving, like the envelope or 1p savings challenge, money round-up apps or the no-spend January challenge. Find a method that is realistic and that motivates you, then stick to it. Save little and often and you’ll soon see your savings increase.
March - Cash in your clutter
Tidy up your home in the New Year and make the most of the unused items you have lying around. Sell clothes and accessories on apps like Vinted or Depop, old tech can be sold on Music Magpie, and you’d be surprised what you can sell on local Facebook Marketplace groups or eBay.
April - Spring clean your bills
Checking through direct debits can be a great way to cut costs and save throughout the year.
Consider whether you really need multiple entertainment streaming services and think about whether you use the gym enough to justify the membership cost. For bills you can’t cancel, like car insurance or your phone bill, have a look to see if you’re paying more than you need to - if you can find a better deal elsewhere, it’s worth switching providers to save cash.
Kay added that while rising energy bills are still a concern, you are unlikely to be able to find a better deal with another provider, however, you could consider installing a smart meter to help you manage your usage better.
May - May the debt not be with you
Kay explained that taking time to assess and clear your debts is key to resolving your financial issues for the year ahead, and with a bit of planning it can be achievable.
She said: “Although it might feel daunting, make a list of what you owe and where, jotting down the balance, minimum payments and interest rates.
“Tackling your debt head-on is the first step in deciding how to get started. Consider paying off your debt with the highest interest rate first, or if you need to start small, pay off the smallest balance first. Just ensure you keep up the minimum payments on all your debts while putting any extra money towards clearing one.”
June - Save on big purchases
If you are planning on heading abroad, getting married or moving house this year, life’s big moments can be expensive, but there are several ways to save without having to scrimp.
Kay said: ‘If you do need to spread the cost of bigger purchases, you can still do this safely with a credit card or a responsible buy now (BNPL), pay later card.
“Although many unregulated BNPL schemes have a bad reputation due to the high-interest rates and missed payment fees, some, like Virgin Money Slyce, will not charge you if you miss a payment. So, you can use it to spread the cost of purchases into more manageable chunks, allowing you to spend without compromising.”
It is also worth considering how you can save money while you spend.
Look for current accounts that offer cashback or rewards for spending and, if you are travelling, look for a current account with zero fees for debit card payments and cash withdrawals. Some providers might even offer travel insurance as part of the deal when you open an account too.