New year, new start: Get your finances in shape for 2013

With the new year well and truly under way and the excesses of the festive season rapidly becoming a distant memory, now is the perfect time to think about getting your finances in order. In this article, we look at a few ideas to take control of your spending. Start now and by the time the new financial year comes around in April, hopefully you should be well on the way to fitter finances.

Budget, budget, budget

We can’t say it enough: a budget is the key to financial planning. A good one will answer important questions like: Do I spend more than I earn? Can I afford a holiday? Why am I in overdraft every month?

Budgeting doesn’t have to be complicated. It can be as simple as writing down your income then subtracting everything you spend in the month. However, this type of budget only looks at an average month, so you may miss big costs like Christmas, holidays or getting your car repaired, as well as little expenses like that coffee you buy on the way to work.

If you’d like a more accurate overview of your finances, online budget planners like Budget Brain from Money Saving Expert can help. These guide you through a series of categories, such as “groceries”, “clothing” and “going out”, and some capture your expenditure over a few months.

Before you start your budget, gather all your bank and credit card statements, and your receipts for things like food shopping. Then take a deep breath, make yourself a cuppa and get started.

Once you’ve entered the information, the budget planner will reveal the truth: either you spend more than you earn or you earn more than you spend. Either way, you’ll know the facts and be able to take action.

The all-important question: Can I afford it?

Now you know exactly what you’re spending, you can start to work out what you need to do to be able to live within your means.

If you’re earning more than you spend, you’re in a good place. But if you’re spending more than you earn, you need to get back on track to avoid getting deeper into debt.

It may be time to change the way you think about money. Let’s take your family holiday, for example. Rather than thinking, ‘Where would I like to go this year?’, the first question should be ‘What can I afford to spend on our holiday?’. Start your planning from there. This way, your lifestyle is being driven by your finances and not the other way around.

Shop around for the best deals

You can make big savings by shopping around for utilities such as electricity, gas, broadband and phone bills. Sites like and uSwitch compare a wide range of products and services.

And don’t stop there: Look at your credit cards, mortgage deal and insurance. What about your mobile phone — are you paying over the odds? Does your bank account have a monthly fee and are the benefits worth it? Could you save by consolidating debt? Do you really need the full satellite TV package or would Freeview do?

If you have children up to the age of 15, Childcare Vouchers could make you substantial savings. Many employers take part in the scheme, so it’s worth asking if yours is one of them.

Easy savings, every day

You’ll be amazed at how the little expenses add up. That coffee you buy on the way to work costs you, say, £2.30 a day — that’s £11.50 a week, or a staggering £598 a year. Could that money go towards a holiday? Help with college fees? Pay off your credit card? If the answer is ‘Yes’, do yourself a favour and buy a flask! Repeat for expenses like sandwiches, parking and magazines and save a small fortune.

Set your goals

Now you’re on a roll, take things one step further and set some financial goals. Whether you want to pay off debt, upgrade the car or save for the future, work out how much you need to put aside each month to reach your target.

With a clear picture of your income and expenditure, it’s easy to see how best to use your money. Which means you’re well on your way to a brighter financial year.

The information provided in this article was accurate at the time of publishing and should be read in the context of the date it was published. Views in this article are those of the author alone and do not necessarily represent the view of Scottish Friendly. No advice has been provided by Scottish Friendly. If you are in any doubt as to whether a savings or investment plan is suitable for you, you should contact a financial adviser for advice. If you do not have a financial adviser, you can get details of local financial advisers by visiting Advisers may charge for providing such advice and should confirm any cost beforehand.