Happy new year! We are now well and truly into 2020 and the end of February is fast approaching. Christmas may feel like a distant memory but your bank account might not have recovered yet from overspending during the holiday season. Now is the time to make changes to ensure 2020 is a financially successful year for you. Here are our top tips to ensure your budget for 2020 sets you up for financial success.
1. Reduce the interest rate on your home loan
Always take advantage of opportunities to pay more than your monthly minimum home loan repayments. For example, if you are given a Christmas or quarterly bonus, ensure you contribute the whole sum towards your mortgage. Whilst it can be tempting to spend a bonus on a holiday or another treat, paying off your home loan quicker (therefore reducing your interest rate) will be much more beneficial in the big picture.
2. Cut down your energy bills
There are a number of small things you can do that contribute to cutting down your energy bill. For example, you could lower the temperature of your hot water boiler and only wash clothes on a cold wash. Similarly, you can turn all of your appliances 'off' instead of leaving them on 'stand by', and try to utilise sunlight as much as possible (e.g. use natural light not bulbs and dry your clothes outdoors). While these initiatives may seem small, overtime together they will significantly reduce your energy bills.
3. Avoid more debt
Buy now, pay later services are becoming more popular with consumers and retailers, but the dangerous part is linking the payments to a credit card, rather than a direct debit. Using credit to get more credit is an easy trap to fall into. The best way to manage your finances for 2020 is to only spend the money if you can afford to spend it today. Delaying payments gives people a false sense of comfort that you can afford 4 smaller payments rather than 1 larger one, but if you use an after pay service regularly, it can very quickly spiral out of control. Don’t forget, if you’re planning to get a home loan or refinance, the banks view buy now, pay later services as debt, so this will affect your borrowing capacity.
“If 2020, is going to be a tough financial year, have a family meeting and explain how you want to save money, and what that money will go towards. If everyone in the household knows what the plan is, their expectations will be set.”
4. Compare car loans
Many people are guilty of accepting the first car loan they are offered through their car dealership, as they believe this will be the best deal and is the easiest way to purchase a car. In reality, it is essential you compare all loans available, from banks to rival dealerships, to ensure you get the best loan. Don't be afraid to show one loan provider a quote from another company to try to drive their rate down even further.
5. Communicate your goals with family and friends
Money can be a difficult subject for many of us to talk about, but it shouldn't be. Talk about money with your kids and set the expectations early. If 2020, is going to be a tough financial year, have a family meeting and explain how you want to save money, and what that money will go towards. If everyone in the household knows what the plan is, their expectations will be set. Don’t forget to discuss money and the family budget on a regular basis, monthly is a good checking duration, so you can reinforce the message and plan for any upcoming financial demands. It’s also a good way to teach kids that money doesn’t fall off trees!
If appropriate, you can send a group message to your family and close friends and explain to them that instead of buying each other birthday presents this year, which can be extremely expensive for large families, you would like to plan an activity with them. Planning to go on a walk, picnic or for family celebrations. For big gatherings, set menus (with set prices) at your local restaurant can keep the budget in check, rather than dividing up the bill at the end of the evening. Working out ways to spend quality time with your loved ones without the big gift costs is a much more memorable way to celebrate important events and will allow you to save money all year.
6. Change your habits
Buying a packet of cigarettes, case of beer or a cup of coffee each week may not seem like a big deal, but sustaining these habit can truly add up. If you can’t go all day without a coffee, bring a coffee from home in a flask and avoid purchasing an expensive coffee from a café. Try out some of the cheaper beer options from Aldi or dare we say it, cut down on the booze and smokes all together.