Financial resolutions you must make (and keep)

Around a quarter of all New Year's resolutions are broken within the first week - with another quarter gone by June - so there's every chance that you have already broken yours. It's hardly surprising. We choose a miserable time to make impossible promises about habits we have developed over a period of years: they are hardly likely to be cleared up in one quick burst of willpower.

However, if you are to avoid consigning yourself to the horrible consequences of making the same financial mistakes year after year, there are some New(ish) Year's resolutions that we all need to make right now - which aren't so hard to keep.

Don't give up the things you want the most
Financial resolutions never stick if they are all pain and no reward. No matter how big the changes you need to make, don't needlessly punish yourself by forcing yourself to give up the things you really enjoy in life. All those articles listing out the cost of a morning coffee and what you can save by giving it up don't appreciate that for some people it's the highlight of their working day.

Give up things you don't want
It's a far better idea to turn your attention instead to giving up the things you don't appreciate. Look through your direct debits and find any that you no longer get much value from. Are your magazine and web subscriptions worth the money? Do you use the gym enough to make it worthwhile? Are you paying for clubs and memberships you're not taking advantage of? You could save a fortune without giving up anything you enjoy.

Question everything
The art of narrowing down what we can and can't live without, starts with reassessing our assumptions. You may have convinced yourself you always need a particular brand of phone, or a specific size of TV or car. You may think you cannot live without certain TV channels, or meals in a particular restaurant. But before you unthinkingly add it to the list of must-haves, consider why you need these things, and whether there are alternatives which might suit you just as well.

Give up habits you don't enjoy
You could save substantially by ditching the habits you have fallen into. One big saving is likely to come from trying another supermarket - especially the budget chains, or by ditching your favourite brands in favour of cheaper own brands. However, there's also money to be saved from reconsidering your media or broadband package, and only buying the products you really value.

Do the maths
Once you've done the easy things, it's time for some maths. At this stage you're not committing to making any changes, just to drawing up a budget to see where you stand. Only by sitting down and making a note of every penny you have coming in and every penny that's going out, will you see what you are spending in each area, and get better control of your budget.

Commit to spending two hours a month on your finances
Once you've drawn up a budget, the next step is to balance it, so you are living within your means each month. The first hour you set aside every month is for the monthly chores like reading your bank and credit card statements, checking your balance, and making sure you are on track with spending.

The second hour is for 'shopping around' projects, designed to reduce the cost of regular outgoings like energy, mobile, broadband, and media. It also applies to annual costs like insurances - as well as forward planning such as savings and investments.

Be optimistic
The only way to make yourself stick to your budget is to have a firm picture in your mind of what life will look like when you do. It may mean living debt-free, losing your money-worries, or even saving towards a reward for your hard work.

You will meet roadblocks and red tape in your efforts to manage your budget, but when you do, your positive picture may just be enough to keep you going.

Accept your limitations
This may seem at odds with the optimism resolution, but you need to balance the two - so that when you fall short of your own expectations, you have a Plan B, and give yourself room to pick yourself up and start again.

One sensible option is to have a safety net for when you cannot stay within the monthly budget. If you overspend, it makes sense to borrow in the way that makes most sense for you, so set up the credit card or borrowing facility that suits you - just in case.

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