Learn how to get rid of your money worries forever this year.
Imagine a year when you don't feel bad after spending money. In one day, you have lunch with friends, buy new clothes and purchase return flights to a beautiful Greek island, and you feel totally fine about it. Indeed, you're happy.
For those of you who've developed a habit of spend first, regret later, that care-free feeling probably won't happen in 2010. Indeed, 2010 is going to be your toughest year yet, financially, and here's why:
Feeling care-free takes a year's practice
You can't feel secure and care-free when you know the money you're spending on luxuries today may be needed for an emergency tomorrow. That's why, from 1 January 2010, you must get in the habit of estimating how much money you've got to spend in a month, and in a year, and put money aside for what you need to buy.
Yes, I'm talking about budgeting, but if I'd mentioned that word at the start you'd have moved on, already bored, to another article. Yet budgeting is just mini-saving. You like saving money, I'm sure. Most people do. When you leave money to the end of the month so that you can still pay your household bills, you're saving. When you budget for a holiday, you're saving.
And so it is that to get into a rhythm where you feel secure requires budgeting, and it also takes a little practice, which is why you've got to work on it for a year.
Getting in a secure position takes a year
It also takes about that long to get a little money stashed away. The problem in your first year of budgeting is that it's just three months to your probably-expensive MOT, or if not then it's some other big bill. Then it's another three months to your summer holiday. You have to be very hard on yourself to start with in order to balance your books.
However, after your MOT and holiday, you'll then have a whole year to save for the next one. That's when it gets easier, and it's also why the first year is so much harder than the rest when you decide to get a grip on your finances.
If you can get all the way to Christmas 2010 and end the year with your debts slashed, or even end up with some savings, then you're on track and doing marvellously.
Discipline hurts, but it's rewarding
When you have succeeded, you won't just feel more secure, you'll be more secure. In 2011, when you keep up your new discipline, you will no longer feel bad about spending money on entertainment and luxuries, because you'll always be putting money aside for it.
When you want to buy a luxury, think whether you can afford it. For me, my problem is concerts and it always will be. Like my mother before me, I'll be going to them right up to when I die. Me ma, weak as she then was, dragged a 10kg oxygen tank with her to her last concert. Hopefully, I'll die shortly after a great gig with a smile on my lips and music buzzing in my ears.
Thing is, there are lots of concerts where I live and only so many I can afford to go to. Sometimes there's a band I really want to see, but it's either too expensive or I've used up my entertainment budget. I've had to learn to say, 'No, I can't go.' Let me tell you that wasn't easy, and still isn't! But it's very satisfying when I realise that I've controlled an insidious impulse and, really, it just makes me appreciate concerts all the more.
Whether your luxury is gigs, girls, gadgets, gussying up, or going away, you can cut back. Yes, there'll be the occasional regret (and many more in the beginning) but that is more than offset by greater self-respect and increasingly fewer red lines on your bank account.
If you don't know how to budget, or if it sounds boring, Cliff D'Arcy does a good job of explaining it in an entertaining way in Five steps to brilliant budgeting.
Building on that secure position is an ongoing process
Look beyond 2010, because to increase your security you'll need to increase your savings. The longer it takes you to start, the longer you'll be feeling those irritating negative feelings after you buy something.
To that end, you'll need to begin saving as early as you can. If you have debts on which you can overpay, you should pay those off first, because that'll put you in a much more secure financial position than saving. It'll also mean you'll be able to buy more stuff in the long run!
Otherwise, you want to start putting money aside. Be realistic. Don't start the New Year saying: 'Right, this year I'm going to save half my salary!' because you're setting yourself up for failure, and then you'll give up. Set an achievable but significant target, whether that's £20 a month or £500 it's down to you.
Savings in the first year of financial planning can be erratic (because you don't have 12 months to save for the upcoming MOT, holiday and so on), so you'll need a flexible, easy-access savings account or cash ISA (a tax-free savings account) where you can save more in some months and less in others. However, I would surely set up a direct debit for a minimum amount to ensure you don't forget to save anything at all.
If you stick to the plan the New Year will be a hard one, but, in 2011 and beyond, you'll find it was well worth it.
Get help from lovemoney.com
If you need a bit of help getting into the savings habit, we can help.
First, adopt this goal: Build an emergency savings pot
Next, watch this video: Savings rip-offs
And finally, why not have a wander over to Q&A and ask other lovemoney.com members for hints and tips about what worked best for them?
Earn 3% AER or even 3.3% AER with a savings account from lovemoney.com
More: How to choose a savings account | Don't fall for these rip-off fads!