The new financial year is an excellent opportunity to review your current financial strategies or, if you haven’t decided on a long-term financial plan, begin exploring options and ways of working that can help set you up for a solid financial future.

In this article, we will be exploring five suggestions that you can use to help establish great financial habits in the new financial year.

5 Savings Ideas For The New Financial Year

Keep An Eye On Your Debt

In times of economic uncertainty, it is almost too easy for your levels of debt to grow out of control.

Between personal loans, credit cards, and flexible payment companies, consumers can find themselves with higher-than-expected debt. Because many of these products carry high interest rates, the balance can quickly spiral out of control.

The first step in managing your debts is to clearly understand how much you owe. Start by creating a spreadsheet that outlines how much you owe, where the debt is held, and the interest rate charged on each.

Once you have created a list, organising your debt repayment strategy becomes much simpler. If you have smaller debts at higher interest rates, pay them off early through voluntary overpayments to reduce the total interest you pay. The money you save this way can be used to pay down other loans.

If you have multiple large debts with high interest rates, it may be worth exploring debt consolidation to pay off multiple loans with a single, lower-interest loan, reducing numerous payments to a single expense.

However, it is essential to conduct your own research to ensure you’re selecting the most suitable product for your needs.

Please note: Sheffield Mutual is not a tax or debt expert. You may need to contact a debt professional, and this service may incur a fee.

Understand Your Income Versus Your Outgoings

Although getting paid at the end of the month feels great, the reality is that for many people, most of that income may already be spent.

Rent, utilities, and non-negotiable bills like your mobile phone can significantly reduce your take-home pay and limit how much you can save. In the worst-case scenarios, these payments can actually exceed your salary, leaving you in a monthly deficit that generates more debt month after month.

The start of the new financial year is a great time to reassess your monthly income versus expenses, including your direct debits and savings.

Start by writing down how much you get paid every month. Then, from this number, start deducting non-negotiable payments that you have to make.

Begin with your rent or mortgage payments, then any car or transport costs, then your utilities such as gas, water, electricity, and council tax. 

Finally, deduct the cost of any work-related essentials, such as internet access and a mobile phone.

Once you have deducted these costs, you will have a clear view of your monthly flexibility.  Any money you have left can be put towards savings, paying debts, and giving yourself a little bit of spending money.

Start Paying Yourself First

When you understand how much debt you have and how much income you have versus your outgoings, it’s time to start putting together a savings plan.

Saving and investing money for the future is the single most powerful financial tool that you can develop.

Not only does establishing savings ensure that you have money to fall back on, but it also allows your money to start growing and developing on its own. This is especially true when you take advantage of smart ways of saving regularly, like a Regular Premium ISA or a Tax Exempt Savings Plan (TESP).

However, starting to save regularly can be difficult. Many people who try to start saving begin by putting away whatever they have left at the end of the month.

Unfortunately, life is rarely that simple, and any unexpected expenses you incur will immediately wipe out your monthly savings.

Instead, focus on paying yourself first. After calculating the money you have coming in and the money you have going out, decide how much of your leftover money you want to commit to saving.

This number doesn’t have to be huge; even £20 or £50 a month can provide some extra breathing room or earn interest over time. Then commit to depositing this money into a TESP, ISA, or another savings account on the day you are paid. This way, you can be confident your savings continue to grow each month.

Buy A Lunchbox

Although not everyone can become a Michelin-starred chef, learning to cook four or five simple meals from basic ingredients can be a great way to save money.

Rather than spending money on takeaways and work lunches, focus on preparing balanced meals that can save you money every single week.

By saving £5, £10, or £15 a week, you increase the monthly amount you can save. This money can serve as a cushion in the event of unforeseen circumstances or begin earning interest alongside the rest of your savings.

Be Kind To Yourself

If you are starting to save money for the first time, it can be stressful and demoralising. At first, the process might seem slow, and you might see any excess or unnecessary spending as a failure.

However, it’s important not to dwell on our mistakes but focus on what we can do to improve our financial situation.

After you have developed a good understanding of how much money you might owe, how much you have coming in as opposed to going out, have a savings plan that you pay into regularly and have started exploring ways to make your money go further, you will have a solid foundation for improving your financial situation in the New Year.

If you commit to your savings strategy and continue to work hard, your new financial habits pay dividends as your savings account grows, protecting you from unexpected hardship and helping you work towards goals such as a new car, a new house, or setting aside a comfortable lump sum for retirement.

Discover A New Way To Save In The Financial New Year

At Sheffield Mutual, we work hard to provide our members with a range of savings options that suit them. Begin the financial new year by browsing our range of lump sum savings options, regular savings options, and children’s savings plans.

Alternatively, consider using our product selector to find the best products for your savings strategy.

If you have questions about any of our products or are interested in becoming a member of Sheffield Mutual, contact us, and our friendly, helpful team will be happy to help you explore your options and identify which savings plans are right for you and your family.

This article provides generic information and the writer's opinions and should not be relied upon for investment decisions. Sheffield Mutual has provided no advice. If you doubt whether a savings or investment plan suits you, consider contacting a financial adviser for advice. If you do not have a financial adviser, you can get details of local financial advisers by visiting www.unbiased.co.uk or www.vouchedfor.co.uk. Advisers may charge for providing such advice and should confirm any costs beforehand.