Happy New Year. It's great to be back after the Christmas break. The new year always feels like a good time to have a fresh start and commit some new habits. And of course, this wouldn't be, A Little Bit Richer, if we didn't lean into that. So today I want to think about how we can make 2024 a great year for our money. I want to talk about how to give your finances a checkup. So I knew I
wanted to get Iain Russell on the pod. He's the head of performance marketing at Moneyhub, a tech company who have developed a money management app that's a great tool if you want to meet those financial goals. So let's get right into it. Okay, so Iain, let's say someone's got a few hours that they're setting aside to go through their finances to get in good shape for this
new year. What would you recommend that they focus on?
As boring as it sounds, I would say set a budget. Take your income, deduct all of your bills, regular monthly outgoings, rent payments, mortgage payments, utilities, and then you've got your next pot of money that you can split between other needs, wants and savings. A popular model for that is the 50, 30, 20 rule. 50% goes towards the needs,
30% towards the wants, 20% towards savings. But you can be as flexible as you need to be because not everybody's the same. And then you can set smaller budgets within those categories to help you because it's really about just paying a bit more attention, taking control of what you earn, spend and save so that you're able to make better informed decisions going forward.
Love the fact that you said budgeting because I think, like you said, it does sound boring, but it is almost like the beginning place, you need to start. You need to know where you're out of your money, how much is coming in, how much is going out, how much are you setting aside for the things that you need. So like
I said, I think that's a crucial step one. But now let's say people have checked over their finances, they know where they're at, what are some good money habits that people can try and get into in this new year?
So building an emergency fund. In Moneyhub, we have an Emergency Cash Builder as one of the tools, it just helps you start to set aside a bit of money for those unforeseen events that we know can come out of nowhere. Maybe they're in the back of the mind, " Oh, this could happen." Such as your car breaking down.
I've had that, I've had that one too many times. It catches you out of nowhere. So if you don't have that cushion to fall back on, that can be very costly.
Yeah, so it's very, very handy. It just gives you that peace of mind that you've been able to build that pot of money just to cover for these events. And then alongside that, looking at savings for the longer term, it's all about building that habit. It might be £ 10 a month, it
could be £ 100 a month. It really doesn't matter. It's about getting that habit in place where you're being able to put a little bit of money aside for future term. And then managing debt would be the next one. Assessing what debt you have, looking to manage and bring down those with higher interest rates like credit cards. It just starts building that sort of healthy financial position for yourself.
And setting aside a certain amount of money that you're going to spend throughout the month as well can help you.
Yeah, managing the debt and saving, building the emergency cash fund, being able to build in that fund of money, and this is where the budget can come in. Again, you can set those smaller budgets on what you want to put towards eating out, or going to the cinema, kind of whatever you want, but you've got to make sure where you can that you're making that money work for you as well.
It's so crucial. I think, like you mentioned, there's so many great tips you just gave about managing your money, thinking about the future, reducing down any debt, but it's still important to have a good time and enjoy yourself because there is a direct link between money and mental health. And if you're always thinking about, " Okay, I need to do this with my money." And not put it
towards yourself. We want to make sure you start the new year right. You've got to also think about yourself. That's why we have a fun fund and we don't go
Yes.
crazy, so we don't go crazy. We budget, we set aside that money.
That's it.
That's what we do. So how exactly do money apps help with maintaining these new money habits that we want people to pick up?
So money management apps like Moneyhub could do a lot of the heavy lifting for you. So for us it's about really bringing together all of your data in one place so you can connect all of your accounts, current accounts, credit cards, savings, mortgage, investments in one place. You then
get a really true overview of your spending behavior. Apps like ours, it'll bring it all together and it can really then help you drill down into that spending analysis and let you again, set budgets in specific areas. Whether that's groceries or whether that is eating out or takeaways, and it's just giving you that true reflection to then let you go on and use all those tools knowing
that you've got everything in one place. At the end of the day, what we want to try and do is to do that heavy lifting and give you that insight so you can make better informed decisions about what you then do next.
I think that's great. I think for some people, initially it could be quite daunting, to see everything in one place. Sometimes it is easy to have the blinkers on when you have a current accounts, all different things in different places. But when you have everything all in one place, it can
be daunting to begin with. But at least like you said, now you know where you are, exactly how much you have to play with, and you can be consistent with those good money habits. So let's stay on that topic of conversation. So let's talk about being in control of your finances. Why is it so important, as you mentioned already, to have things like financial safety nets for the future?
Yeah, so like I said before, it's those unexpected surprises. Even some of those more expensive times of the year, we've just all probably had one of those with Christmas. Sometimes if we're honest, your budgets can suddenly start to go a bit out of the window in the festive spirit.
You kind of just slightly go over when it's the festive time.
Yeah, it's a really tricky one, which is why new year is so popular for then getting back into gear and getting on top of finances. Having that discipline to have that money aside for these events means that you're better equipped to then catch up after those more expensive periods. You can compensate for that, but then also you are
covered for those bigger things. Like we mentioned before, if your car breaks down or your boiler breaks, washing machine, fridge, freezer, these are things you can't do without.
Yeah.
It sucks when it happens, but being able to have that to call on is just so important.
I agree. As I mentioned earlier, I've had stuff with my car just randomly breaking down and having those financial safety nets means you don't have to dip into your everyday monthly income. You've got that pot of money that is there for these random things that happen. Like you said, things break down, things stop working. Maybe you need to travel from one place to another and you hadn't
accounted for it. That's just the money that you can know comfortably if something happens, my everyday monthly finances that I've accounted for are going to be completely fine because I'll touch on this one pot that is dedicated to things, unexpected expenses that crop up.
Yeah. As you say, yeah, it's the word, isn't it? We're saying they're surprises or they're unexpected.
Sometimes-
It's best to ...
... not nice surprises, but yet surprises.
No. Exactly. You could be really budgeting everything to a real minute level, but we know that there's always those things that do become unexpected.
Absolutely. I agree. So Iain, this might be a new year, but some habits have to stay the same, and mine is definitely one of those. So I'm going to ask you the question that I have always been asking, I guess, right at the end of the episode. What are your top three tips that you'd give our listeners to help them get a little bit richer?
First top tip would be to maintain that financial discipline. Have a second thought when you're about to spend money about whether you definitely need it. If you're buying some new clothes, will you wear enough to justify the price? Would you potentially like to see that money sitting in a savings account or knocking off a bit of debt? Just taking that moment can really help get your mindset
right when thinking about your finances. Second is to live below your means. Again, being mindful of those spending habits, allowing yourself that buffer to be able to top up your emergency pot. Final tip, start early. No matter how much you're able to put away, whether that's £ 10 or £200, or what your target is, if it's clearing debt, putting more into your savings account or topping up your pension, the
earlier you start the better. It just gives you that bit of financial security and freedom.
Iain, thank you so much for coming onto this episode. I feel like we're all rejuvenated and we're ready to tackle the new year with our finances and we're empowered and we're in control. So you've shared some amazing gems. Thank you so, so much.
Thank you very much.
Next week, I want to continue my episodes on property with a look at taking the second step on a house buying ladder. There's so much advice out there for first time buyers, but there's still a lot to think about when you're deciding whether to buy a property again. See you then, and in the meantime, follow the podcast,
write a review, and tell a friend. It's three things that will really help other people get A Little Bit Richer too. Bye.