START your new year's resolutions early this year by doing these four money fixes to get your finances on track for 2023.
Christmas is the most expensive time of year, with the average household overspending by £740, according to the Bank of England.
It could mean that you're now strapped for cash, or have got into debt, as a result of trying to afford the celebrations.
You might want to get a head start on reviewing your finances now, AJ Bell head of investment analysis Laith Khalaf said.
He's one of the experts on The Sun's Squeeze Team, here to help you through a crippling cost of living crisis.
If you’re worried about how to make ends meet, are struggling to pay off your debts or don’t know how best to manage your cash, get in touch by emailing [email protected]
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Below are Laith's tips on how to get your finances in order ahead of the new year.
Manage your money
Budgets can go out of the window at Christmas.
Make sure you take stock and understand what your current financial position is, Laith said.
"Pull together a picture of your total finances, including your monthly incomings and outgoings, your debts, and any savings and investments," he said.
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You might want to put together a spreadsheet, or a list, to help you do this.
MoneySavingExpert.com offers a simple to use budget spreadsheet, and there's a free budgeting tool from the government that could help you get on top of things.
Slash your outgoings
If you're spending more than you're bringing in, or you want to boost your savings, you'll want to slash your outgoings.
Go through your statements to see what you can cut back on.
You might find that you've forgotten to cancel a free trial and you're paying for something you never use, for instance.
Laith said cutting a few monthly subscriptions is a quick way of putting more money back into your pocket.
Make sure you're getting value for money on subscriptions you want to keep.
"For instance, if you’re paying £50 a month for a gym membership but only going once a week, could you join a cheaper gym, or perhaps find individual classes which might give you the same exercise bang for fewer bucks?" Laith said.
Tackle your debt
Once you've got to grips with your finances, you should then focus on tackling any debts you may have.
It’s important to identify whether any debts are attached to "priority bills".
These are bills where the consequences of not paying them are greater than with others, though you should still keep up with all your repayments.
Priority payments include rent or mortgage, and council tax.
Then, you'll want to focus on dealing with high-cost debt like credit cards and loans, which tend to come with hefty interest charges, Laith said.
"Pay down the debt with the highest interest first, and once you’ve paid off what you can, see if there’s any option to reduce the interest you’re paying by switching to cheaper products," he said.
For example, you might be able to switch to a 0% balance transfer card – which means you can move over debts you already owe onto a new card, and you won't pay interest on this amount for a set period.
By putting a stop on paying pricey interest, you can clear your debt much more quickly and cheaply.
Build up a rainy day fund
With a cost of living crisis meaning that households are struggling to pay their bills, the idea of having spare cash to save could feel unachievable.
But even if you have a bit of spare cash to set aside, it's a good idea to put it into a rainy day fund.
"If you suffer any unexpected expenses, like your car breaking down, you can afford them without resorting to borrowing," Laith said.
Keep your rainy day fund away from your regular account so you're not tempted to dip into it.
You might decide to set up an easy access account, which means it can be withdrawn quickly if needed.
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You can use comparison websites such as Savings Champion, Moneyfacts and Compare The Market to find top savings rates.
Nationwide is currently offering an interest rate of 2.5%, and Shawbrook Band 2.3%, according to Moneyfacts.
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