Money | The best New Year financial resolutions you should make

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Feeling the pinch after Christmas? Make some New Year financial resolutions to ensure you get on and stay on the right track this year.

As we switch back to reality after the festive season, many of us fear even looking at our bank accounts. Hibernating for January and cutting back on spending are the most common ways to make up for that extra spending, but we tend to fall back into old habits by February.

If you consistently struggle with your finances throughout the year, perhaps you should set some realistic and easy resolutions now to keep you on track in 2016.

  • Set up and stick to a realistic budget. Create a spending and savings plan. Prioritise your expenses, such as mortgage/rent, utility bills, travel and food. Allocate another proportion for savings and use the remainder for day-to-day expenses that you usually incur.
  • Reduce or stop reckless spending. Identify what areas you recklessly spend your money on. This can include morning coffees, late payment fees or unused clothes. Put the cash you would normally spend on such items and place in a jar. Use this cash for something that you really need and find it hard to save for, such as new tyres for a car or even a holiday.
  • Build an emergency fund. Unfortunately, unexpected emergencies and expenses do happen and we tend to dip into our regular savings or current account to pay for. Set up a separate account for such occasions such as a Credit Union or savings account in your regular account. Set aside a small proportion of your income or cut back on discretionary spend, such as dining out.
  • Pay off high-interest debt. Credit cards are convenient but they can be costly, especially when you do not pay the full amount each month. Make 2016 the year that you pay off all of your high-interest debt. Start by paying off your card with the lowest balance first so you can feel a sense of accomplishment.
  • Set up or increase retirement savings. Want to travel and do all that you ever dreamed off when retiring? To do that, we need to start saving now. Get educated or speak to professionals that know pension schemes to ensure you are getting the best deals available.