Common Money Mistakes You're Making

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Understanding the Challenges of Financial Resolutions

Every year, millions of people set out to make positive changes in their lives through New Year’s resolutions. However, many of these goals are abandoned before the month is even over. January 9th, often referred to as “Quitters Day,” marks the point where most people give up on their resolutions. This highlights a common issue: while we may have good intentions, sticking to them proves difficult, especially when it comes to managing our finances.

Financial resolutions, such as saving more, cutting back on expenses, or paying off debt, are designed to improve our financial health. But why do so many of us struggle to maintain these habits?

Common Reasons for Financial Resolution Failures

One major reason is setting unrealistic expectations. For instance, if you decide to cancel all your streaming subscriptions, you might find it hard to stick to this decision. Instead, consider alternatives like switching to a cheaper plan with ads or alternating between different services. These small adjustments can help you save money without drastically altering your lifestyle.

Another issue is that resolutions are often too vague. Simply stating a goal like “save more” lacks clarity. To create effective financial resolutions, it's important to be specific and actionable.

Steps to Make Financial Resolutions Stick

1. Be Specific Setting clear and focused goals is essential. If your aim is to build savings, start by tracking your spending. Look at your bank statements over a typical month to identify areas where you can cut back. There are also apps that can assist with this process. For example, Plum is a smart money app that uses technology to analyze your spending. It connects to your bank accounts and calculates how much you can realistically save each month. This amount is then automatically transferred to a savings account of your choice, making it easier to manage your finances.

2. Make Small Changes Implementing small, manageable changes increases the likelihood of success. For example, if your goal is to buy a house, opening a dedicated savings account could be a good first step. If you're aiming to pay off debts, focus on one debt at a time. Using an app like Plum can help you track your spending and understand where your money goes each month.

3. Regular Financial Checks Small regular checks can lead to significant improvements. Setting aside time each month to review your finances or checking your savings every three months can help you stay on track. You might discover that you’re still dining out frequently or not getting the best deals on your broadband. Regular reviews allow you to adjust your strategies as needed.

4. Choose Easy-to-Start Changes Most people don’t want to spend time analyzing bank statements or checking interest rates. Using tools that automate these tasks can increase your chances of sticking to new habits. Plum, for example, offers Auto-Savers that automatically transfer money into a savings account. This feature encourages consistent savings and helps you build a nest egg over time.

5. Be Flexible Life is unpredictable, and it’s important to remain flexible with your financial plans. Unexpected events, such as a job loss or an emergency, can impact your budget. Having an emergency fund is crucial in these situations. Plum allows users to adjust their savings amounts easily, ensuring they can adapt to changing circumstances without financial stress.

About Plum

Plum is a popular financial tool used by over 2.5 million people. It offers a range of features beyond just saving and investing, including budgeting tools that help track expenses and manage regular payments. The app provides a comprehensive overview of your finances, allowing you to filter transactions and set weekly allowances to control spending.

Security is a top priority for Plum, which uses encryption and biometric authentication to protect user data. The app holds certifications like Cyber Essentials and adheres to security frameworks such as CIS and ISO 27001. Plum is regulated by the Financial Conduct Authority (FCA), and funds held in certain accounts are protected by the Financial Services Compensation Scheme (FSCS) up to £120,000 per customer.

You can download the basic version of Plum for free, with additional features available through subscription. Whether you're looking to save, invest, or manage your budget, Plum offers a convenient solution to help you achieve your financial goals.