A three-step plan to boost your finances in 2023

The new year is traditionally a time to make fresh plans and resolutions. And that should certainly apply to your finances as well.

BIlls are rising rapidly at the moment, including gas and electricity, food, petrol, and so forth. For many – perhaps most – of us, our incomes aren’t increasing fast enough to keep pace. Of course, that can be pretty scary.

There ARE things we can do to keep our financial affairs under control, though, so in my article today I’m recommending a three-pronged strategy.

1. Maximize Your Income
2. Minimize Your Expenditure
3. Apply Smart Budgeting

I’ll look at each of these in turn…

Maximize your income

In other words, ensure you have as much money coming in as possible. Even if you’re living on a fixed pension, there are still things you may be able to do to boost your income and improve your financial position.

My first tip is to check you’re getting all the welfare benefits you’re entitled to. I recommend trying the Turn2Us online benefits calculator. This asks a series of questions about your finances and personal circumstances. It then works out which benefits (if any) you may be eligible for.

Another top tip is to check your tax code. As you may know, this code incorporates your tax-free allowance. It tells your employer (or pension provider) how much tax they should be deducting every month. If your code is wrong, you could be paying more tax than you need.

You should be able to find your tax code on any payslip or pension statement you receive. This article on the popular Money Saving Expert website will tell you exactly what the code means. If you think your code may be wrong, contact HMRC and ask them to look into it.

You could also consider applying for a part-time job. This might range from a Saturday job at a local supermarket or DIY store to gardening, delivery driving, leafleting, and so on. 

Part-time work is generally low stress. As well as giving your income a boost, it also has the benefit of keeping you mentally alert and meeting new people and potentially new friends. Part-time jobs are often advertised locally or you could search on websites like Indeed.

Finally, you could start a ‘side hustle’ to give you an additional income stream. Again there are lots of options here, from doing online surveys to entering TV quiz shows!. You can see many more ideas in the Earning category on Mouthy Money.

Minimize Your Expenditure

The second strand of my strategy involves reducing your spending. Again, there are lots of ways you may be able to do this.

One method I want to mention here is using price comparison websites. Two of the best known are Go Compare and Compare the Market.

These sites let you compare prices for a range of services. They include home insurance, car insurance, travel insurance, holiday insurance, mobile phone services, broadband internet, pet insurance, and more.

At one time they used to let you compare energy suppliers as well, but with prices so high and so few deals around at the moment, they typically can’t help much with that right now.

Nonetheless, if you’re looking to save money on services like these, price comparison sites are well worth a look. I would offer just two pieces of advice here. First, use more than one service.

All sites cover a different range of suppliers and sometimes they negotiate special deals for their members. So you can and probably will get quite different results from different sites. 

The other thing is to check out cashback services as well. These are services like Topcashback and Quidco. The way these sites work is that you start by signing up as a member, which is generally free.

Then when you need to buy something you start at the cashback site and find a supplier listed there who provides whatever product or service you need. Click through that link and make a purchase, and if everything goes as it should, cashback will appear in your account in due course.

• When I checked recently, I found Top Cashback was paying £25 cashback to anyone who clicked through to Compare the Market and took out a policy through them. So in this case, by going to Topcashback first, you would get a £25 cash rebate in addition to saving money with the price comparison site itself. It’s often worth combining price comparison sites with cashback sites to get the best possible deal.

Again, in this article I only have room to skim the surface of money-saving methods. I highly recommend checking out the Saving category on Mouthy Money for many more ideas and strategies.

Apply smart budgeting

This is the final strand of my strategy. Having maximized income and minimized expenditure, smart budgeting means prioritizing what you spend and – as our American friends say – getting the most bang for your buck.

One thing I strongly recommend is that you perform a spending audit. By that I mean taking an in-depth look at what you are spending over, say, a three-month period. 

Look especially for any subscriptions or other regular payments and see if they are things you could do without. And yes, I’m afraid that does include charitable donations! 

When I helped elderly friends do this recently, I found they had six standing orders to local and national charities which they had accumulated over the years. None was huge, but taken together they came to almost £50 a month, which was money they could ill afford.

So I had to advise them to cancel them. They said they’d feel terrible doing that, so I told them to decide which one was the most important to them and keep that but cancel all the others. That was a compromise they could live with. In the end they kept a small monthly payment to a local animal charity and cancelled the rest.

There may be other things you don’t need as well, like insurance policies that are no longer relevant or memberships you no longer get any benefit from. Again, my friends paid a membership fee for a local botanical garden by standing order but they hadn’t been for over a year.

I had to say to them, if you’re only going once or twice a year, it’ll be more economical to pay an admission fee when you go. Going through all your outgoings may well highlight opportunities for reducing your expenditure like this.

It’s also important to look at things like mobile phone and broadband bills. Unfortunately, if you don’t take a proactive role, these tend to go up and up. Although in theory suppliers aren’t supposed to penalise long-standing customers, it definitely does happen.

Earlier this month I noticed my Virgin Media broadband bill had gone up to almost £50 a month. So I phoned and said I was thinking of switching. Miraculously, they found me a new deal on £28 a month for the next 18 months, almost half what they had been charging.

It shouldn’t be necessary to do this but sadly if you’re a loyal customer and never complain, it’s highly likely you’re going to be – to put it reasonably politely – shafted.

Finally, I want to say a word about savings. Obviously in these cash-strapped times saving is hard. But if you don’t have any money stashed away, it can make you very vulnerable if the unexpected happens. 

A general guideline is that everyone should aim to have at least three months of their normal outgoings available in easily accessible form. An easy access account is likely to be the way to go here, and you should be able to earn a bit of interest on it as well. 

Interest rates for savers, as I’m sure you know, are pretty poor at the moment, but the Money Saving Expert website – mentioned earlier – will show you who is paying the most. At the time of writing the best interest rate available on a no-strings-attached easy-access savings account was 2.86% with Zopa. But that may have changed by now, so it’s worth looking to see who MSE are currently recommending.

For many more smart budgeting tips and ideas, check out the Spending category on Mouthy Money.

Closing thoughts

Summing up, my recommended strategy for boosting your finances in 2023 is three fold. First, maximize your income. Second, minimize your expenditure. And third, use smart budgeting to ensure that you deploy your financial resources as efficiently as possible.

I’ll close with one last piece of advice, and it’s arguably the most important of all. As it (allegedly) says on the front of The Hitch-Hikers Guide to the Galaxy, DON’T PANIC.

These are undoubtedly challenging times, and the media love nothing more than a good scare story to make everyone terrified. But panicking seldom achieves anything and is often counter-productive. When times are hard, it’s more important than ever to keep a cool head and deal calmly with the situation. 

Whatever our circumstances, as I hope I’ve shown above, there are lots of things we can all do to help keep our finances on an even keel.. 

Keep visiting Mouthy Money for much more valuable advice about boosting your finances through 2023 and beyond!

Nick Daws writes for Pounds and Sense, a UK personal finance blog aimed especially (though not exclusively) at over-fifties.

Photo by Microsoft 365 on Unsplash