How to get your finances sussed in 2022

Here we are in 2022, and Christmas is already beginning to feel like a distant memory.

If you made New Year resolutions you may also be seeing some of them beginning to vanish? In our next article we will look at how to stop that happening.

But first we want to look at one specific area that many people are struggling with at this time of year – finances. If you have overspent at Christmas and are now trying to cope with the consequences then maybe we can help.

In this article we take a quick look at how to get your finances SUSSED:

• S – Stop overspending
• U – Use what you’ve got
• S – Sell what you don’t need
• S – Start saving
• E – Eliminate debt
• D – Do it all again!

S – Stop overspending

This sounds very obvious but is much easier said than done. The main reason we slide into debt and don’t manage to build up savings is by overspending. It is hard to break this habit, but it can be done.

Four helpful ways to wean yourself off overspending are:

• Make a monthly budget to ensure that you cover your essential expenditure and limit your spending on everything else. Our recent article Make 2022 the year when you get out of debt has more information about how to make a budget and stick to it.
• Don’t use credit cards. It is so easy to let debt mount up very quickly by using credit cards. And before you know it, you are in a financial mess because you can only afford to pay off the interest on your balance rather than the balance itself. So you will do yourself a favour not to use them in 2022 unless it is an absolute emergency.
• Limit your ability to spend, even when you go food shopping. Either use cash or set up a separate bank account for shopping and just transfer into it before each shopping trip the money you can afford to spend. If you self scan you can see how much you are spending as you go, and this can really help you to keep your spending in check.
• Have regular no-spend days. A no-spend day does what it says on the tin. Just don’t spend any extra money that day. Nothing at all apart from essentials such as travel to work. So if you do travel to work remember to take your own coffee and lunch with you, and no newspapers or magazines on the way. If you’re home that day, no popping out to the shops for extra supplies, just use what you’ve got. And if you feel like going out to meet friends, either make it somewhere you don’t have to spend money or invite them round instead. 

Whether you do no-spend days weekly, monthly or just every now and then, they can make a positive contribution to your mission to stop overspending.

U – Use what you’ve got

Until very recently, western culture actively encouraged consumers to buy new and get rid of anything that is either old or defective in any way. But gradually we are all becoming more conscious of the global need to protect the environment and use less resources. And using what you already have is an excellent way of doing this.

The “use what you’ve got” mantra could become your first port of call in any area of your life. For example, when planning a food shop, check what you have first and buy food that will supplement your existing supplies so that nothing goes to waste. 

If you need new clothes or household items, is there anything you already have that could be reused or repurposed instead of buying from new? If not, consider buying from an online site such as eBay or charity shops to avoid buying from new. 

Using/repurposing what you have – or giving others the opportunity to do so – is a great way to get what you need without spending a small fortune.

S – Sell what you don’t need

We just referred to buying from online sites such as eBay or charity shops to avoid buying from new. But as well as doing this you could also sell/donate your used items too. 

Our article How do I get rid of all my lockdown clutter? explored various ways you can redistribute unwanted items, many of which involve you getting paid for them. For example selling online, selling to a dealer or running a car boot sale.

So if you have items in your home that you no longer want or need, selling them can not only help you declutter your home but makes an effective contribution to getting your finances sussed.

S – Start saving

Yes we all know that it’s good to have savings, but many of us don’t. The average savings per person in the UK is less than £10,000, and at least 6.5% have no savings at all. 

So why not make 2022 the year when you start to save? Financial experts recommend that ideally you need to build up savings equivalent to at least 3 months living expenses. This would cover you in the event of an emergency and help you to stay on your feet financially.

But how do you do this? Many of us struggle financially from month to month as it is, let alone trying to put money aside for savings.

Many financial experts recommend the 50/30/20 rule for managing your finances. This means divide your monthly net (after tax) income into three different categories: 

• 50% for needs;
• 30% for wants;
• 20% for saving and/or paying off debt.

Even if you are not in a position to split your money this way at the moment, it may be a useful goal to aim for by the end of 2022. 

E – Emerge from debt

Carrying debt is stressful and interferes with many different aspects of our lives. It can lead to us not being able to do many of the things that we really want to do, and means that we are continually worrying about money.

So a key part of getting your finances sussed is to start getting on top of your debts.

In our recent article Make 2022 the year when you get out of debt, we covered the topic of debt in detail and looked at the steps you can take to get out of debt. These steps are:

• Get a clear picture of your situation.
• Create a debt repayment plan.
• Make a realistic monthly budget.
• Balance your budget.
• Get external help if you need to.

It is not easy to get out of debt, but it can be done. And the benefits will be well worth the effort.

D – Do it all again!

Finances are an ongoing situation. They need constant attention, and there will probably never be a time when you can just let things run their course. To ensure your finances stay on track you need to keep your eye on things and continue working through any or all of the above steps as needed. You’re in this for the long haul, but will gradually see your finances improving and becoming a positive aspect of your life rather than a negative one.

We hope that this article helps you to get your finances sussed in 2022. If you need any further help at any stage, remember that Loans 2 Go offer quick loans that may be able to simplify your current financial situation.

Check back here soon for more financial and lifestyle tips from Loans 2 Go.