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How to manage money this new year

2020 wooden blocks on a stack of coins

Accidents can have a huge impact on our lives. Serious physical injuries may mean you are unable to work as you did before, putting strain on your bank account. In fact, our research has found that 32% of people that suffered an accident felt it had a negative effect on their finances. If this is the case for you, the new year is the perfect time to take control of your bank account. Find out how to manage money and save with our top tips below.

Set a realistic monthly budget

To stay in control of your finances, creating a budget is essential. Firstly, establish your exact income each month. Next, calculate all your fixed outgoings, such as your mortgage/rent, utility bills, food shop etc. Then deduct your outgoings from your incomings to work out your disposable income. Once you have this figure, you can establish exactly how much you can save and spend each month. Creating a monthly budget in excel is often the easiest way to keep track of your finances, as you can quickly update the document with any changes.

Switch suppliers for big savings

Household bills are an essential monthly expense, but that doesn't mean they have to be sky high. Often, you can significantly cut your bills simply by switching suppliers. In fact, Money Saving Expert claims that a typical household could save over £300 per year by switching and there are often incentives for new customers, such as vouchers or cashback. Doing a price comparison online may take less than 5-10 minutes, so it's well worth it to save big bucks.

Reduce non-essential spending

Whether big or small, non-essential costs can add up and create a dent in your bank balance. For example, if you treat yourself to a takeaway once a week, it may cost you around £10. While this may not seem a huge upfront cost, over the course of the year it adds up to £520 on takeaway food alone. This is just one example - think about all the things you could cut back on in every aspect of your life and how this could boost your bank account.

Track all your incomings and outgoings

How to manage your money effectively and efficiently doesn't need to be complicated. You simply need full visibility of everything that's coming in and out of your accounts daily, weekly and monthly. Have you ever looked at a past bank statement and wondered what on earth some of the charges were? You're not alone - but this could mean you are forking out for things you don't need or use like a subscription service. Keep track of all your incomings and outgoings regularly and if you spot anything suspicious, contact your bank.

Consolidate your debts

Do you have multiple debts owed to different providers? You should aim to reduce them this new year. If you have large credit card bills, bank loans or any other debts, you may be able to consolidate them into one debt consolidation loan. This means you will no longer make separate payments to different providers, instead paying one fixed sum to your consolidation loan provider. You can often save a lot of money long term by consolidating debts, as you only have one interest rate to keep track of. 

Create a savings plan

Wondering how to manage money and save? One of the best ways is to set up a savings pot. Having a safety blanket of cash is important for financial health, as it allows you to deal with life's unexpected costs. There are many ways to do this, such as applying for a savings account and putting a small sum in each month. You will earn interest on any cash sat in the account, whether it's £10 or £10,000, so it's well worth it. There are different types of accounts available, from easy access to fixed rates, so make sure you do your homework to find the best one for you.

Use a budgeting app

If you have been poor with managing money historically, you may benefit from a budgeting app. There are some great options available, many of which are free from the Appstore. Depending on which one you choose, you may be able to set monthly budgets, track your spending and set money aside with dedicated pots. Apps such as Monzo will notify you when you're close to your set budget for the month. It won't ever stop you from spending your money if you need to go over, but it serves as a reminder to keep on top of your purchases.
Now that you know how to manage money, you can get the new year off to a great start. It's also worth noting that you may be able to claim compensation if you're struggling financially due to an accident that wasn't your fault. You can speak to us on to find out more.