Five Tips for a January Financial Health-Check

Taking timely action to review your spending and think about how you manage your money can help you start the year with your finances on track, according to a Coventry University expert.

Sally Dibb, a Professor in the university’s Centre for Business in Society, is an expert in reducing financial vulnerability and consumer behaviour. Here she provides tips on how to get on top of your spending and stay in control throughout 2022.

With the tinsel, tree and baubles packed away for another year, January is when many households and students must face the costs of Christmas spending. As inflation passes 5% and with food and energy prices rising, the pressures this year are especially acute. Yet no matter how challenging, there is no better time for action to get back in control of your finances. Early action offers the best chance of a smooth financial ride through 2022, could help you achieve your financial goals, and might head off financial problems.

Here are Sally’s five top tips for health-checking your finances:

1) Review your spending

“When did you last really review your spending? The start of the year is a great time to take stock of your outgoings. Prepare to be amazed! How much do you really spend on expensive coffees or snacks bought ‘in the moment’? Is your preference for branded food items pushing up the cost of your weekly shop? Do you know what your energy or fuel costs? Perhaps you have gym or other memberships that are no longer good value for money. It’s well worth putting time on one side to shop around for better deals on your phone, broadband, energy and insurance. One day spent on this each year might save you hundreds of pounds.”

2) Create a simple budget

“Budgeting is a great way to keep track of your spending and control your finances. All you need are details of your income and outgoings. It’s simple to do. Once you’ve reviewed your spending, you’re halfway there! You can find step-by-step guidance on how to create a basic budget using our MoneySkills app. The MoneySkills app provides information on budgeting and saving through short video clips, e-zines, and an interactive budget planner. It is an interactive tool that you can use to help manage your finances on the go. Use the app to learn how to budget, start routinely saving and to set financial goals.

“The app was developed out of CBiS’s research, funded by the Money Advice Service and in conjunction with the Open University. The research found that learning how to budget and working out how to save can help put people in control of their money.”

3) Set up a regular savings direct debit

“When the bills are stacking up, committing to regular saving might seem unrealistic. But it’s surprising how quickly a small amount saved each month can mount up. Creating a ‘rainy day’ fund can cut the stress of unexpected expenses and help you save for a special occasion or planned big spend. If the direct debit is timed for just after you’re paid, you’re much less likely to miss the money going into your savings.”

4) Set aspirational financial goals

“Having aspirational goals gives you a great incentive to save. Research shows that we often spend for emotional reasons, to cheer ourselves up or to lift us through life’s challenges. Sadly, this kind of short-term spending can make it difficult to work towards our longer-term goals. Setting longer-term financial goals can be a great motivation for reducing day-to-day spending. Your goal might be the promise of a dream holiday, the desire to replace an unreliable car, to fund time off to visit friends or relatives, or even to become debt free. Some people work towards these goals by making simple changes – such as cutting back on coffee shop drinks or walking or cycling to work - to allow them to save toward these goals.”

5) Seek help quickly if you need to

“Money is one of the last taboos, with many of us resistant or embarrassed to discuss our finances, even with those we love. Often, we leave it too long when money problems hit, yet seeking help quickly can make all the difference. Our research findings show that some people resist asking for help because they don’t know who to trust and worry that a source of free help might actually be trying to sell them something. But there are many useful sources of independent and free guidance out there, including:

MoneyHelper offers free advice on money and budgeting.

Stepchange (0800 138 1111) and National Debtline (Freephone 0808 4000) both provide free and independent help on debt.”

• Find out more about the Centre for Business in Society and Coventry Business School.
• The MoneySkills app has been developed by Coventry University’s Centre for Business in Society (CBiS). It is a free-to-use personal finance app helping people manage their money.
• MoneySkills is available free on iOS from the App store or for Android from Google Play Store and as a web-based application.