A lot of New Year’s resolutions fall by the wayside because of the financial cost. The traditional spike in gym membership in January (followed by guilt-paying it every month for the rest of the year) is enough to put many people of making resolutions at all.
But some resolutions can actually save you money, even if they’re not explicitly financial.
Smoking is an increasingly expensive habit. When times are tough, a government’s first port of call is to raise taxes on vices – smoking, drinking and gambling. Smoking will only get more expensive.
The average 20-a-day smoker will save around £3,000 a year just by not buying a pack every day.
But improved health may also reduce prescription costs, hygienist costs (for cleaning nicotine stained teeth) and even cosmetics – non-smokers have better skin. Not to mention energy and dry cleaning bills from having to clean your clothes more often to get the smell of stale smoke out.
OK, gym memberships are expensive. But take advantage of that vast space you can see through your window (we like to call it ‘outside’) and exercising can save you money.
Firstly, as with smoking, you’ll be healthier and therefore end up spending less money on prescriptions.
Secondly, the more time you spend exercising, the less time you have to sit around in pubs or dawdling online with the ever-present twin temptations of Amazon and iTunes.
Thirdly, the fitter you are, the more energy you have. And that means less money spent on expensive takeaway coffees to get you through the day.
Healthy eating can seem more expensive than fatty, salty convenience and junk foods. But it’s a fallacy. For most of us, healthy eating doesn’t have to mean exclusively eating rye bread and avocado, it’s more a case of switching to fresh produce and avoiding pizzas, chips and ready-meals.
Yes, niche ‘health food’ type products like flaxseed is relatively expensive. But it’s amazing how far fresh ingredients will go. Just ask anyone who’s made three meals out of a £5 spaghetti bolognese.
This goes double if we’re trading off cooking at home with eating out or even worse – takeaways, the most expensive ways to eat.
Read more books
Books may not be as cheap as they used to be, but they’re still a lot cheaper than the alternatives: eating out, drinking, the cinema. And with the wealth of out-of-copyright classics available as ebooks, you could read for a year for the price of a Kindle.
A TV licence may be cheaper, but if we’re talking about saving money whilst edifying yourself, finally reading War and Peace is definitely a lot more constructive than keeping tabs on X-Factor’s swansong.
And though libraries may be closing left, right and centre, with the rest swapping books for computers and conference rooms, there’s probably still a fair amount worth reading in there – and library cards are still free.
Hell, you might learn something too.
Pay down debts
Paying off debts isn’t just about not owing money, and getting the peace of mind that comes with that. It’s about not wasting money.
Just like rent is only propping up your landlord, interest is only funding the bank. That’s money you could be using to buy books, oily fish or even earn interest on. The quicker you pay down your debts, the less money you waste per pound.
Start by paying off your most expensive debts first. This is usually what should have been short-term debt – credit cards, overdrafts, payday loans. Then work your way to your cheaper, long-term debt. Use the money you save on interest to pay off your debt quicker, this will save you money on interest payments in the long run.
There are some exceptions. Many loans and mortgages carry penalties for paying off early. In these cases its worth figuring out which is more expensive overall – the interest over the period it would take you to pay the debt off with minimum payments, or the penalty for paying it early.
Start saving money
Saving money is an intuitively good idea. Yes, it’s true that with inflation currently outstripping interest, the depreciation on your savings means saving is actually losing you money in most cases, there are important scenarios in which building a nest egg will save you money.
First is the emergency fund. The difference between your car breaking down, or your boiler needing a replacement, and paying for it with a loan or credit card (see above) and taking it interest-free out of your rainy-day-emergency-fund is pronounced.
Second is the beloved ISA. This tax-free savings and investment wrapper can save you a packet in tax over the years, particularly if you top up the full allowance every year (perhaps a bit ambitious at first, but you’ll get there). And when interest rates finally do rise, your savings will appreciate in value again.
With a Junior ISA, you could even use this to put aside for your child’s future. Assuming a 5% growth, if your child was born at the end of 2013, you could put aside a lump sum of £29,769 for their 18th birthday by putting aside just £100 a month. Of course the rules are subject to change, and the value of your stocks & shares ISA can go down instead of up, which are both possible.
And of course, if you can put together a deposit for a house, you can stop throwing money at your landlord and pay towards eventual ownership instead.