New year, new money habits

The new year can be a great time to re-think how you manage your finances, creating new habits to help you be financially better off. That might be better off in terms of pounds and pence, but more importantly, you will feel like you’re in greater control, have greater confidence and a feeling of peace of mind.


Bad money habits that need to be ditched!

Firstly, it’s important to acknowledge that all the good work you put in developing good money habits will come to nothing if you don’t first ditch the bad habits. These bad habits can stop you from reaching your goals and can set you up for failure.

  1. Avoid racking up debt on credit cards
    If you do use credit cards, avoid wasting money on interest and be sure to pay the full balance every month. Not only does this avoid throwing money at nothing, but it also keeps your credit score in tip-top shape and encourages you to always think realistically about what is truly within your means.

  2. Avoid shopping when you’re bored
    It’s all too easy to shop online when you’re bored. To avoid temptation, try disrupting the idea by doing a short but productive task. Pack your bag or set out your clothes for the next day, tidy a cupboard out, listen to a podcast or read a book. You’ll soon find that the urge has disappeared entirely.

  3. Avoid impulse purchases
    If you find yourself adding something to the shopping basket, instead of checking out immediately, leave it for a couple of days – or longer, for a large purchase. This gives you “cooling off” time to think about whether you really want the item.

  4. Avoid buying things to impress others
    It’s easy to think that if others have things, you need them too. However, maybe we can all learn to appreciate the things we already have, rather than looking for the next thing that may, or may not, provide some temporary fulfilment. Get into the habit of asking yourself “why do I need or want this?” when you feel tempted to splash out.


Good money habits to develop

Now that you have some ideas on bad habits to be dropped, we can focus on the good money habits that you might look to adopt.

  1. Create a financial plan
    By mapping out your goals and how long you have to save for them, you know can work out how much you need to be saving.

  2. Budget and track spending
    Set a budget and then track your income, how much you’re spending, and how much you’re investing every month. There are no end of useful tools to help with this, but I found some useful hints and tips for various options you might want to review here.

  3. Cut expenses
    Having developed your budget, think about all the things that you could cut out. What do you actually need? What do you value and derive enjoyment from? What do you spend money on that isn’t really that important to you and could be cut? Even small things added up over time can have a significant impact.

  4. Review your bank statements
    Keeping a close eye on your statements means you’ll spot errors as well as keep an eye on your spending habits.

  5. Pay off debts
    By paying off debt, particularly high-interest debt, you can free up money to start savings and to secure your financial future.

  6. Build your emergency fund
    A good goal would be to have 3-6 months of essential living expenses to cover unexpected events. And remember, this pot is strictly only for a true emergency. It’s not for things you simply haven’t remembered to budget for, such as car servicing, property maintenance, annual insurance premiums, or holidays. The planning habits I’ve mentioned above should curtail this need, in any case.

  7. Start saving and investing
    Pay yourself first. By that, I mean, rather than waiting until the end of the month to see what’s left and putting that aside, make saving for known expenses and short-term goals such as holidays one of the first things to come out of your budget. Then think about saving for the longer term, considering investments and pensions. Arrange for these payments to leave your account at the beginning of the month – make sure they’re gone before you’re tempted to spend on other things!


Habits build up over time. Changing your routine and habits can feel strange at first, but if you start with the end in mind and consider the bigger picture at every step, you’ll find it far easier to motivate yourself through it.

And, of course, if you’d to discuss any of these topics in further detail, please do get in touch.

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