How to detox your finances in 2018

Author:

Martin Upton is the Director of the True Potential Centre for the Public Understanding of Finance (PUFin) at the OU Business School.

Previously he was Treasurer of Nationwide Building Society.

Martin Upton

With Christmas a distant memory by now, and the dark month of January upon us, I thought I’d start the new year by giving you my tips about how to detox your finances and give yourself a clear head for managing your money in 2018.

• UTILITIES - Make a promise to do comparison price checks for all your utilities (including ‘phones and internet ) and your car and home insurance providers – and be prepared both to haggle with your existing supplier to get the best deal and if they don’t give it to you then switch suppliers. Haggling is fun – you’d do it in a souk so why not do it at home?
• CREDIT CARDS - Make a promise to get rid of all your credit card debt. Check the interest rate charged on each account and pay down the most expensive first if you can’t clear all your debts. Be prepared if necessary to replace credit card debt with cheaper borrowing – say a bank loan. If you have 0% deals on credit cards note carefully when these end.
• BANK ACCOUNT - Be prepared to switch your current account. It’s simpler than you think and as banks fight fiercely for customers in this market you can get a great deal that pays you a high interest rate and perhaps gives you cashback too.
• SALES - With the economy likely to be limping along in 2018 you can expect sale after sale after sale in the shops – both in the high street and online. If you are buying major items and you aren’t buying them in a sale ask yourself ‘why am I doing this’. For really big items – like white goods – be prepared to haggle over the price. When the economy is weak you may be surprised about the consumer power you have!
• SAVINGS - Try to ensure you have a pot of savings to deal with life’s uncertainties – like your washing machine breaking down. Aim to have £1000 in such savings for each adult in the household. Doing this gives you financial resilience and ensures that a mechanical nightmare doesn’t turn into a financial nightmare.
• BUDGET - Take the time to build a budget for your household. When you’ve got a plan for your money you’ve got a plan for your life. There are tools to help like www.managingmybudget.com
• CREDIT SCORE - Check your credit files you can do this free of charge. So go to Experian, Equifax and Callcredit and see if there is anything on your files which is wrong and which may be adversely affecting your credit rating. Worryingly your rating may be marred by things that don’t directly relate to you – for example financial matters relating to a former partner!
• CUT DOWN - Try to cut out wasteful spending – three fewer coffees a week can save you £500 (and can help you build up that resilience fund)
• AVOID FRIDAYS & MONDAYS - Don’t make big financial decisions on Fridays and Mondays. On Fridays your mind is full of the fun things you want to do at the weekend. On Mondays you are getting your head around the working week - and perhaps the school week - ahead. You need a clear head when making big financial decisions – not one befuddled with other thoughts and concerns.
• FREE COURSE - Finally, try our free course 'Managing My Money' if you want to get more practical guidance and advice on your personal finances. 

Try to make at least some of these your New Year financial resolutions.

Best wishes for the New Year!

Originally published by The Open University Business School.