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Tips for sticking to your New Year’s budget

24 January 2022

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January is here, and so are our New Year’s resolutions. Perhaps one of your resolutions is to get your finances on track and create a budget. Setting that goal might be a great place to start, but how can you be sure you’ll stick to it?

We’re going to give you some tips on how to stay on budget. But first, it’s time to get your detective’s hat on to find out where your money’s going.

How much money do you have, and where does it go?

Let’s start at the beginning – what is your regular income? Make a note of your salary (after tax), any additional work income (e.g., freelance work), benefits, maintenance/child support, savings interest, investment income, pension income, and any rent from properties.

The next step is to list all your spending. That means everything – regular bills, variable spending, and infrequent spending, such as:

Regular monthly bills

Mortgage/rent
Water
Gas
Electricity
Council tax
Broadband

Landline
Insurance
Subscriptions (e.g. TV, magazine, music)
Gym membership
Charitable donations
Car tax

Variable spending

Groceries
Clothing
Childcare
Toiletries
Medicine
Commuting costs
Fuel

Takeaways
Eating out
Entertaining
Sports
Hobbies
Cleaning
Gardening

Infrequent spending

Birthdays
Christmas
Holidays
Car servicing and MOT

Eye care
Dental care
Tax bills (if self-employed)

Now that you have a clear picture of your income and expenditure, you can create your budget to plan out how much you will aim to spend and save.

How to stick to your budget

Creating a budget is all well and good, but what matters is whether you can stick to it. Here are seven tips that could help you.

Set realistic targets

Your best chance of sticking to your budget is making your goals specific and achievable. Rather than just saying you want to save money, it can help if you commit to saving a specific amount (we look at this in more in tip five).

When it comes to trimming your spending habits, don’t expect to wipe out takeaways completely or immediately halve your grocery bill. Small steps that you can stick to can make significant differences.

Focus on your financial goals

Keep a spending diary

Make Direct Debits your friend

Turn saving into a bill

If you are the type of person who waits until the end of the month before saving, you could find there’s nothing left to squirrel away. However, if you set up a savings standing order to go out at the same time as your Direct Debits, you know your savings will be growing every month. Of course, if there is anything extra left at the end of the month, you can also transfer that to your savings account to give it an unexpected boost.

What about emergencies?

Now and then, life can throw a curveball. You could lose your job, have expensive building repairs, or have a car breakdown. Things may get tricky if you have next to nothing in the bank.

That’s why it’s a good idea to save a buffer. Ideally, your emergency fund should generally allow for at least three months of living expenses. It may sound like a lot, but if you save a bit every month, you could be surprised at how quickly your emergency fund may grow.

Don't forget to live a little

The final word

Who knew sticking to your New Year’s budget could be so easy?

Now, all that’s left is to work out the type of savings account you need, if you don’t already have one set up. Ultimately, your choice will come down to whether you want to be able to dip in and out of your savings or are happy to lock your money away with a fixed rate. Learn more about Marcus savings accounts here.

Whichever you choose, our tips will help you stay on course to achieve your saving goals.

The content in this article is for information only and is not advice. All content in this article was accurate on the date of publication shown above.