Six steps to sort out your finances before the New Year

IF money worries are getting to you then it’s time to make a plan.

Now is the perfect time to reassess your situation before the New Year and work out what you can do to sort out your finances in 2021.

Just making a plan for your finances in 2021 will help you feel more in control Credit: Getty Images – Getty

These tips should help you get back on track.

Set your self a goal

What do you want to achieve in 2021 with your finances? Now is a really good time to set yourself a goal.

Whether it’s getting on the path to buying a house, paying off your debts or going on holiday, it will really help motivate you if you have something you’re aiming for.

Try and check in on your goal every month. Perhaps you could set a reminder in your diary to reassess where you are at.

Give yourself a financial health check

Go through your finances and work out where you are at.

Make a note of how much money you have coming in and out and how much you owe.

If your outgoings are more than the money you have coming in or you want to save towards a goal, such as buying a house or car, then you will need to cut down your outgoings.

Once you know where your finances are then you can start to move forward and sort them out.

If this seems really daunting then you could get free advice from a debt charity like Stepchange, Citizens Advice or National Debtline who will help you go through it.

Cut down on your bills

Make a list of all your bills and go through them. Is there any way to save money?

For things like your energy, insurance or broadband contracts you may be tied into deals. Make a note of when your contract ends and set a reminder in your phone a month before to assess that bill again.

Are there any subscriptions you can cancel or cut down on? For example, are you using Netflix regularly or do you need all of the Sky channels that you have.

Haggle down your bills

If you’re out of the minimum term contract on any of your bills but you don’t want to leave then remember you could try haggling to get a better deal.

Set aside some time to phone the provider. Before you call make sure you do your research and find out if there’s a better deal out there.

Explain that you want to leave unless there’s a way that they can match that offer or ask if they can make you a new one.

Don’t be afraid to walk away if you’re still unhappy that you’re paying too much.

Check you’re not missing out on benefits

If your circumstances have changed, for example, you’ve lost your job, you may now be eligible for Universal Credit.

How much you’ll get depends on your circumstances, but the minimum standard allowance is £342.72 a month.

You may also be entitled to other benefits like child benefit or marriage tax allowance.

Use calculators such as Turn2Us or Citizens Advice to check.

Make a plan to pay back your debts

It will probably be impossible to pay back debts before January 1 – but if you have the money then make this a priority.

If you don’t then at least make a realistic plan for how you are going to get back on track.

If you’re paying off an expensive credit card with a high interest rate this is going to take you a lot longer to pay off your debts – and it could cost you thousands of pounds extra too.

You may want to think about consolidating your debts and using a 0% balance transfer credit card or a personal loan to pay them off.

Make sure you work out how much it would cost to pay back in total once you’ve factored in interest rate and fees.

Use an eligibility checker such as this one from MoneySavingExpert, which helps predict if you will get accepted for credit and it doesn’t leave a mark on your credit score.

Once you’ve got a plan of action you will start to feel a lot better about your financial situation as you are taking control.