The new year is fast approaching, and you’ve probably started making your list of resolutions. Many people plan to correct their wrongs for the new year annually. Paramount among their list of resolutions is to save more and keep their finances in check. With about 11.5 million UK adults having less than £100 in their savings, it is safe to say these financial resolutions are necessary. So, if you’re looking for tips on how to to keep your finances on track in 2021, here are some handy tips to help you.
1. Keep your credit score in check
Your credit score determines whether or not a lender (bank or money-lending services) will consider giving you a loan such as a mortgage. Therefore, before you pick up a phone to call a mortgage broker, you should know what goes into keeping a credit score in check. First of all, endeavour to keep your credit card balances low, limit your applications for new credit and pay your bills on time. There are five key areas used to calculate your credit score; these are:
- Credit age
- Recent credit
- Mix of credit
- Payment history
- Level of debt
However, a good credit score may turn bad due to errors which may occur in credit reports or issues such as identity theft. By keeping a close eye on your credit score, you can detect these errors on time and correct them.
2. Repay your existing debts
Being in debt can be as uncomfortable as having a noose around your neck. Debt can be burdensome especially when you have no means to repay it, not to mention the unexpected bills that may come up. This is why it is liberating to clear all outstanding debt. But how do you do this? Start by clearing your bigger debts as this makes it easier to plan and helps you reduce an otherwise lousy credit score. You should also avoid consolidating all your debts on one card (even if it is a low-interest credit card). A majority of people who do this are unable to repay within a specific given period. Subsequently, the elapsed time leads to higher interest rates. It helps if you can use other resources you already have to clear all debts at once.
3. Build your savings
People around the world agree that 2020 has been a pretty tough financial year. With the high unemployment rates, it is understandable that your savings may have reduced significantly this year. However, your commitment to building it back up in 2021 should be greater than your need to spend. Before making any purchase, be sure it is an item you need and not just want. Take steps to save some extra money where you can like eating out less, switch a cheaper mobile plan, and take advantage of discounts on clothes and other items.
These steps to tracking your finances would help in achieving your financial resolutions for 2021. You can use apps such as Cleo, Money Dashboard, or Wally, to help you keep an eye on your spending.