MoneyMagpie Editor and financial expert Vicky Parry shares how you can live a richer life with these easy financial resolutions for 2025
You might have given up making New Year’s resolutions, but have you ever thought about making them for your finances?
There are some small and easy steps you can take this year to set yourself up to finish 2025 on a strong financial note and set yourself up for a richer future. Pick some – or all – of these resolutions to get started on your path to a better financial life.
Save for an emergency fund
A large number of us live month-to-month, not helped by the years-long cost of living crisis we’ve been facing. However, an emergency fund is important to cover unforeseen costs without putting yourself into debt. Even saving £50 a month equals £600 saved in one year. That’s having one less takeaway or night out each month, or finding ways to make money on the side to top up your income like taking surveys or even using cashback sites to earn back on purchases.
If you’re on a low income and receive Universal Credit, you may be eligible for a Help to Save account, too. This allows you to save up to £50 a month for four years. At the end of the second and fourth year, you will receive a Government bonus which equals 50% of your highest balance held in those two years. So, if you save £50 a month, that’s a free £600 bonus at the end of the second year, and again at the end of the fourth year.
Make a budget
Do you know how much you actually spend every year? Without tracking your expenditure, it can be easy to accidentally spend hundreds or even thousands of pounds per year. Putting together a budget can really help you control your spending and find spare cash you didn’t know you had!
It used to be that we needed to manually go through our bank and credit card statements to make a budget, but these days there are apps that do it for you. For example, Emma, HyperJar, and Plum are all apps you can connect to your bank account to analyse your spending. They also have plenty of other useful features, such as searching for subscriptions you’ve forgotten about, to improve your budget habits.
Contribute to your retirement fund
If you’ve opted out of your workplace pension, consider opting back in. A small sacrifice now will make a huge difference by the time you retire. You can also contribute additional funds to your pension, although you won’t have the benefit of extra employer contributions on top.
If you’re self-employed or not in employment, you can still contribute to your retirement. Sweeping even £25 a month into a pension can help you build a retirement fund. You can also look at alternatives, such as a Lifetime ISA or LISA. These are savings accounts designed for two things: either first time home buyers or as a retirement fund.
A LISA allows up to £4,000 paid in each year (as part of your annual £20,000 ISA allowance). The Government then tops up 25%, so if you save the full £4000 a year that’s a £1000 bonus each year on top, for free. It’s a good alternative for people who don’t get a workplace pension. You can open an account from the ages of 18-39, and pay into it until you’re 50. You can’t access the funds until you’re 60 (or you’re using the funds to buy your first home), so there’s a whole decade for your savings to mature.
Start investing
Investing seems scary to many who haven’t done it before. However, it’s now easier than ever for people to invest even small amounts and learn about the stock market. Previously, we would need the advice of expensive wealth managers and platforms to invest our money for us. These days, advances in technology mean investing in the stock market is accessible for everyone – thanks to robo advisors and robo investors.
Apps can help advise you on or invest your money for you, based on algorithms similar to strategies wealth managers use. Like any investment, your investment can go down as well as up – so starting small is important. Drip-feed your money into your investing account too, rather than investing large lump sums, as this can help you mitigate market ups and downs.
Improve your credit score
Your credit score impacts how easy it is to get things like phone contracts, credit cards, loans, and mortgages. It can even impact whether a landlord selects to rent to you in a competitive rental market. There are a few easy things to do to improve your credit score. First, pay down your debts where possible but don’t close your lines of credit. This is because a low credit utilisation looks better to lenders, as it shows you’re responsible.
So, if you have £2,500 debt on a total £5,000 limit, you’re using 50% of your credit, which is quite high in lenders’ eyes. If you paid the full amount and close the account, you have £0 credit available to you and lenders can’t see that you’re responsible with your money. However, if you paid off £2000, you’d have £500 of debt or 10% usage of a £5,000 credit limit – which is an optimal amount to improve your credit score.
You can also make sure you’re on the electoral roll, try not to apply for credit (such as phone contracts or new bank accounts) more than every six months, and use a credit improver like Loqbox if you’re a tenant to make your rent count towards improving your credit score.
Speak to an Independent Financial Advisor
Finally, make 2025 the year you get independent financial advice. A consultation can set you back around £200, but this money will be saved and then some in the long-term with the right advice. An independent financial advisor can look at your current circumstances and future goals, and help you reach them by advising on a strategy that suits your income, obligations, and future aims. It is particularly useful for anyone at a major life change stage, such as buying a new home, facing a large promotion, having children or when your children fly the nest as adults.
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