Mid-Year Resolution: How to Effectively Reassess Your Budgets

With the year almost halfway through, there is time to reflect on how those new year’s resolutions have worked so far. Amongst the usual promises of exercising more and eating healthier, many people choose a financial goal such as saving more money or reducing outstanding debt. A poll by YouGov found that saving more money was the fourth most popular new year’s resolution with 31% of people planning to do so.As everyone knows, setting resolutions can be difficult to maintain without the proper focus and setting of realistic goals. Here at Wizzcash, we know that some people may still be paying off Christmas debt long into the new year too, so if you made plans to tackle your finances in January, it’s now a good time to reassess your budgets to see how things have gone and what’s still to achieve.

Review Outstanding Debt

Looking at the state of play with what you currently owe is a good place to start. Look at your outstanding balances on any borrowing you have from credit cards, overdrafts, short term loans or personal loans and look at how much so far this year has been paid in to reduce them. Some of these you will have fixed repayments as part of the agreement, but for any credit card debt that you have, it can be easy to only make the minimum repayment each month. Whilst it may be more manageable to do so, reviewing what you have paid against the amount of interest accrued will put this in perspective. You may find that so far this year you have reduced your credit card debt by a lot less than you think unless you are currently on a 0% interest-free period. If the average UK credit card debt is £2,604, it would take over 26 years to clear it with the minimum repayments, at an interest rate of 19.9%.

If your goal was to reduce credit card debt this year, paying more than the minimum repayment could help you to tackle this. The Financial Conduct Authority (FCA) found in 2016 that 650,000 people had been in persistent credit card debt for 3 years or more and a further 750,000 had only been paying minimum repayments for that time.If you are in a 0% period currently, double-check when this is due to end and review your options. With any other loans that are on a fixed repayment schedule, review them to see if you can make overpayments as many lenders will be willing to help you do so. Thus, it may be worth contacting your lender, if you can afford to make overpayments. At Wizzcash, there is no fee or additional cost for early repayments.

Switch & Save

When reassessing your finances, finding what is currently working well and what isn’t can help form better choices. For example, if your credit card is out of its 0% interest promotion, or coming to the end of it, looking at balance transfer cards can help avoid having to start paying interest on your debt. Using comparison sites like Uswitch, MustCompare.co.uk or even through a Credit Reference Agency (CRA) such as Experian or Equifax, you will be able to see what products are currently available. This doesn’t just go for any credit cards, but also if you feel you are paying too much for services like utility bills, broadband, TV packages and insurance products. For example, it was reported in January that £800 million was overpaid by customers for their energy bills over the last 7 years. Taking the time to check what you’re currently paying out for could save you lots. If you set goals at the beginning of the year, how many of your accounts have you managed to switch to a better deal since then? Now is a good time to review these outgoings from your accounts, if you have more than one, and look at how much has been spent on them so far this year.

One way you can help your budgeting is by taking the ‘cost-neutral’ approach which in effect means cutting back in some areas and putting the money saved into other expenses. This way, if you can reduce, for example, £50 on one bill per month, you can then put this amount into your credit card balance or an emergency savings fund. Your total outgoings will be the same, but you would have shifted the way your money is working to reduce your overall bills.

Reassess Your Goals

Everyone has good intentions in mind when setting goals at the beginning of the year, but were they achievable? It’s very easy to say you plan to reduce your outstanding debt by a certain amount or save this amount of money by June, but the reality is life happens and best-made plans don’t always pan out that way. 2020 is a perfect example of this where a developing situation can suddenly be all-consuming. This, however, doesn’t mean you can’t achieve any goals but instead is the perfect time to reassess them. Positivity goes a long way when sticking to goals, so celebrating even the smallest milestones is a good mindset to have. After all, you need to stay motivated to achieve your financial goals. According to Equifax, 46% of people have said they didn’t think they’d achieve their financial goals and setting ‘smart’ goals that are achievable will provide direction.

Overall, being specific on what you want to achieve for the remaining year and in the long term with benchmarks along the way to regularly check, will create attainable budgeting goals. Getting help along the way shouldn’t be dismissed either, so speaking to your creditors if you find yourself struggling to meet your repayments on time may help you to reorganise and reassess your existing financial situation.

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