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Published on January 27th, 2013 | by Pete

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A guide to organising your finances in January

What are you going to achieve this year? According to research by www.thinkmoney.co.uk, 27 million of us in the UK are determined to stick to a budget in 2013.

After the financial chaos that is Christmas, getting your finances sorted out in January can be a bit problematic. This guide intends to help you get your money back on track with three simple steps – so you can budgeting properly throughout the New Year.

1. Assess the damage

Some of us are filled with dread when bills land on the doormat in January. Over Christmas it can be tempting to spend and then forget about it… and January is the time when it comes back to bite you.

So get those bills opened and look at how much you’ve spent.

Some costs – such as Christmas presents – are ‘one-offs’, so at least you’ll know that your spending won’t usually be that high. Other costs, like heating bills, are likely to stick with you for at least another couple of months.

Facing your financial situation head-on in January can help you make a plan for the year ahead.

2. Set out your budget

You may have to cut back on your spending for the first month or two of the year – to help you recover from Christmas.

Setting out a budget can help you decide exactly how much you can afford to cut back.

You’ll still need to pay for your essential costs (like your mortgage or rent, Council Tax, food, petrol and bills), so it’ll help to figure out exactly how much goes on these each month. Once you’ve worked that figure out, it’s time to look at how much you have left over.

This ‘left-over’ money can initially be put towards repaying your Christmas debts as quickly as possible. You may have to cut back on some ‘luxuries’ for a while (your budget can show you areas where you might be spending too much).

Once these debts are cleared, you can decide how much you’re going to save each month – and how much you’ll have left to spend.

3. Stick to it!

It may sound simplistic, but it’s important to stick to your goals throughout the year – not just in January.

There are a few tactics that may make this easier. For example, if you’ve decided that you’re only going to spend a certain amount each week after your essential costs, it might help to just take this amount out of a cash machine. Once it’s gone, it’s gone – pretend you don’t have any more money you can spend that week (unless absolutely necessary, of course).

Setting up a Direct Debit to a savings account for a certain amount each month will also encourage you to save automatically. If the Direct Debit goes out just after payday, you’re less likely to notice the money leaving your account. Make sure at least some of your savings are easily accessible though – just in case you need it.

Once you’ve established your budget, and set up some good saving and spending habits, budgeting will hopefully become second nature.

Who knows how healthy your finances could be by 2014?

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