2018 is the year to get your finances into great shape

IF you are still thinking about your New Year resolutions, remember it’s a great time to sort out any money matters.

On average, it takes people five months to repay the debts they rack up over Christmas, according to research from Nationwide Current Accounts.

But by acting quickly, and changing a few financial habits, you may find you can get back on track more quickly – and the transformation doesn’t always have to be painful.

Here, Sarah Coles, a personal finance analyst at financial services firm Hargreaves Lansdown, suggests seven simple tips to transform your financial life in 2018…

Treat yourself to a financial makeover

You may be a tad too cash-strapped for much of a social life after Christmas and New Year – but while you’re cooped up indoors, this could be a great opportunity to take stock of your financial life.

Consider your overall pension and investments position. Review how much you’re paying in, whether that’s enough to meet your goals, and how to free up more cash to invest.

Clear away any financial clutter

Tidying up your finances, along with any discarded Christmas wrapping paper, will make life easier.

Dig out the paperwork on your old pensions, check whether there are any valuable guarantees or expensive penalties for switching. If you’re free to switch, consider whether it may be worth moving them into a single, more modern pension.

Consider giving up what you don’t love ahead of what you do

The small luxuries in life, such as morning coffees and after-work takeaways, may be the obvious candidates for the chop in your new, healthier financial regime – but if they are a great source of joy, losing them will be a constant, ongoing battle.

You should also look at giving up what you don’t love at all – like paying more than you need to for utilities, or buying expensive grocery brands.

Consider building a savings portfolio

Remember, it’s wise to keep around three to six months’ worth of expenses in easy access accounts as an emergency fund.

Once you have that in place, you may want to consider looking at fixed-rate bonds – which could potentially offer higher rates in return for tying your money up. If you’re saving for a longer-term goal, consider whether your time horizon and appetite for risk means some of your money could be moved into share-based investments.

Get your Isa into shape

There are different types of Isas to suit different needs, so consider whether your choices suit you, and whether it’s time to switch.

Build regular investment habits

Make this the year that instead of putting off investments, or rushing to meet the Isa deadline, you commit to investing little and often. This is less painful than trying to find a lump sum.

Finally, be realistic

Saying, ‘I’m going to retire at 50’ may sound great, but if you’re being unrealistic you could soon become disillusioned and run out of momentum. Set realistic, achievable goals, build a budget around them, and save a sensible, affordable sum every month.