Money SavingThe Best Ways To Save Money As A New Year's Resolution

In this blog, we discuss:

• Tips And Tricks On The Best Ways To Save Money For The New Year
• New Year Savings Challenge - Which One Works Best
• Set Saving Goals For The New Year
• Bottom Line…

Tips And Tricks On The Best Ways To Save Money For The New Year

Saving money for an entire year is hard, but it can be done. It’s important to set realistic goals and to create a plan that will help you stay on track. Start by identifying the areas where you can reduce your spending and look for ways to maximise your earnings.

If you are starting the new year with a checklist, then you need to consider adding some financial-to-dos like improving your credit score, budgeting effectively and saving for that holiday at the end of the year. Let’s check out tips and tricks that can guide you to save some money in 2024.

1. Budgeting

It can be difficult to keep track of your expenses without a budget. Also, it’s so frustrating not knowing where all that money is going! So when it comes to saving a little more each month, the best place to start is to create a budget. A clear budget can help you set clear rules about how much you can spend and what you need to cut back on.

How can you set up an effective budget? Start by noting down all your fixed expenses such as your mortgage or rent, mobile phone contracts and groceries. Knowing how much you spend each month and the kind of things you spend money on, will help you see your spending habits and where you need to improve.

2. Try And Improve Your Credit Score

Your credit score these days is quite important especially when you want to take out a mortgage or buy a car. It tells the seller how good you are at repayments on loans taken out. If your credit score is low, the chances of you being approved for such are slim.

Try improving your credit score by paying your bills on time, do not inquire about credit loans often as this can drop your score drastically. Limit how many accounts you open or credit cards you apply for, these can help your credit score to improve. If you are a forgetful person, set up a debit order date for all your payments to be paid automatically.

If you have a credit score less than 670, make it your priority to raise it in 2024. Although this depends on your area, you will see fit to what your highest score is where you live.

3. Cancel Any Subscriptions You Have

Unnecessary subscriptions are the pits! Ever subscribed to a fitness app or mobile game and forgotten about it? And boom, money is deducted from the account - unnecessary subscriptions! The best way to keep track of such is to make a list of all your subscriptions, if you don’t remember your mobile ones, smartphones these days have made it easier for us to know what we are being charged for. Bring up the list and start evaluating.

‘If it hasn’t been of use in the last 3 months, get rid of it.’ - Nontozakhe Raphadu, our money-saving guru. 

4. Create A Stop Order/Debit Order

Having to manually save your money is a hassle. It’s easier and more convenient if you set up a stop order or debit order to take the money from your account and put it in your savings account. Setting up this direct deposit will help you avoid the temptation to use the money in your account and not even feel like you’re saving.

5. Participate In A New Year’s Challenge

New Year’s challenges are a fun way to save money. It always starts with a small amount that you can afford and accumulates bit by bit. Let’s dive right into the New Year’s challenge.

New Year Savings Challenge - Which One Works Best

Whether you are planning to save up some money for a house, or car deposit or you simply want to save for your annual holiday, then the New Year savings challenge is the way to go. There are a variety of challenges you can try to get things going. Let’s have a look at the best New Year’s savings challenges you can try.

1p Saving Challenge

As the name suggests, you start by saving just 1p. The next day you put away 2p, on the third day, 3p and so on. By day 365 you will have saved a total of £667.95. This challenge takes the whole year to save so it would be best to start in January and through to December.

The £1 Challenge

This is an easy saving challenge you can take on from the beginning of the year. Simply save £1 a day for 365 days and you can end up with £365 at the end of the year.

This challenge is best done in conjunction with other challenges as it is easy and not a huge commitment.

The Fiver Challenge

The Fiver Challenge is the most ambitious New Year savings challenge you’ll find. This option is best if you’re saving for a major milestone, such as a mortgage deposit, wedding, car, or other major purchases. This task is difficult and requires serious dedication, and as the weeks go by it gets more and more difficult, so people usually give up halfway through.

The Fiver saving challenge works the same way as the 52-week challenge, but you go up in multiples of £5 every week. So for the first week. You will save £5. The following week £10, the next £15 and so forth. Until you get to the last week you will be saving £260 for that week. If you do this challenge correctly, you should have saved £7,000 at the end of the year.

The 52-week Saving Challenge

This is a weekly challenge, which means that you will need to set aside money each week to reach your goal. It is important to remain consistent and disciplined throughout the challenge.

With this challenge, the amount goes up each week. So in week one you save £1, in week two £2, in week three £3 and so on. On week 52, you will save £52. This will give you a total savings of £1,378 at the end of the year if you are consistent. And as Bankrate once said: ‘The new year offers a great opportunity to re-evaluate your budget and rebuild your savings,’ here at LDV we hold the same opinion. Starting as the year begins not only allows you to accomplish what you want but also gives you the motivation to stay consistent.

The £1,500 challenge

The £1,500 challenge is a bit hard for many to stick to as the method is slightly different. The challenge works by increasing the amount you save each day of the week and after day 7 which is Sunday, you reset again from the beginning.

So, on Monday you save £1, Tuesday £2, Wednesday £3 until Sunday which you will save £7. The next Monday, you will then return to saving £1 and increase it by £1 each day until day 7. Repeat the process until the end of the year and you will save a total of £1,456 to be exact.

These methods have been proven to work provided that you show consistency. Saving can be made easy and by following these guidelines, you will save a little bit more without having to feel that money is coming out of your account.

Set Saving Goals For The New Year

The 50/30/20 Rule

Lloyds Bank believes that ‘sticking to the 50/30/20 rule is easier than some budget plans.’ We believe that this rule can help you draw up a reasonable budget that you can easily stick you to reach your goals, something we and Lloyds Bank have in common.  Let’s dive deeper into how this works.

The 50 % = Needs

Needs are all the essentials we need for survival. For e.g

• Rent or mortgage payments
• Health care insurance
• Water and lights or any other utilities
• Groceries
• Car instalment
• Other payments (school fees, fuel etc)

These payments or commitments should only make up 50% of your income. If you are paying more than 50% for your needs, then you will have to cut back on a few things like buying a smaller house or driving a more modest and fuel-efficient car. Downsizing on your lifestyle to ensure that your needs only take up 50%, will help to keep you on the right track.

The 30% = Wants

Wants are everything that is not a need. These you can live without, they are just an ‘add-on’ to your needs. Wants are not limited to:

• New unnecessary clothes, shoes or jewellery
• Gym membership
• Eating out
• Social events (concerts, festivals, movies, sporting events etc)
• Latest tech-smart gadgets

These are just a few to mention. Wants are all those little extra things you spend money on to make life more pleasant for you and your family. If these are taking more than 30% of your income, serious adjustments need to be made. Rather than binding yourself to a gym membership for a certain period, why not do it at home? There are so many free fit apps that one can download to enjoy getting fit and healthy at home.

Instead of eating out every other week, why not swap the takeaways for a home-cooked meal? Not only will you be saving money, but also you will sharpen your Masterchef skills.

The 20% = Savings

Now let’s get to the good part - SAVINGS! If you allocate 20% of your income to savings consistently, you have made it in life! The economy is uncertain these days and anyone can lose their job at any time. Having emergency funds like your savings is a smart way of going through life. There are always unforeseen circumstances that we may need to prepare for. How can you ensure that you are covered?

Let’s see some ways in which you could save your money.

• Create an emergency fund account
• Open an ISA (Individual Savings Account) for your monthly allowance
• Take part in one or more of the New Year savings challenge

No matter how difficult it may seem, always put money away and be disciplined enough to leave it there. The longer it stays, the more it will grow.

Benefits For Following The 50/30/20 Rule

1. It is easy to use - This rule offers a straightforward method of budgeting that anyone can follow and succeed. The best way to ensure that every penny goes where it’s supposed to is to distribute it immediately when your income is paid into your account. This way, you will stay consistent.
2. Manage Your Money - It helps you manage your money and keep track of your expenses. In this way, you will see where you need to adjust or improve.
3. Prioritise Your Important Expenses - You can cover all your payments without going over budget or having to end up with a negative balance.
4. Long-term Financial Security - When applying these rules, you secure your long-term finances. You will be able to reach your long and short-term financial objectives if there are any without having to incur any debt.

The main idea behind the 50/30/20 rule is that anyone from any earning basket can implement this in their lives. Remember though that for those with a lower income you may need to adjust the percentages.

Bottom Line…

Saving for yourself should not make you live your life like a spartan. Life should be enjoyed and by following these saving guidelines, you will enjoy it. Remember to sign up for royalty cards to save even more money by earning points or getting cash back. Check out Love Discount Vouchers for our Finance & Insurance discount codes.

Following our guide on the best ways to save money can help you make a difference in your finances. If you want to go big, try out the New Year savings challenge and be on your way to taking charge of your savings. Be prepared for next year and enjoy the finer things in life!