New Year's resolutions for 2012 that save you money

Make these New Year's Resolutions and save thousands this year.

1) Stop smoking

Giving up smoking is a tough resolution, and one that by now your whole body is demanding you give up, but the financial rewards for success may be enough to make you think twice. If you can kick it for life, there's £8,000 up for grabs - not counting the amount you save on cigarettes.

Non-smokers, and those who have given up, pay about 50% less for their life insurance than smokers. Over your lifetime, assuming you're about 30 when you kick the habit, that adds up to a saving of £8,000, or about £150 a year.

2) Save into your pension

Channelling your savings into a pension doesn't seem like the most thrilling option, and the payback is incredibly long term, but the difference it can make is astonishing. Let's say, for example, you were investing £80 a month. If you were to switch your investment into an employer pension, many organisations will match at least part of your contribution, which could instantly turn it into an £160 investment. Then add in the tax relief and a basic rate taxpayer would be at £200 a month. If you then got a return of about 7% on it, you'd end up with about £2,500 at the end of the year.

3) Get savvy about your savings

Have you ever considered using a current account as a savings account? Believe it or not, nowadays, this is a savvy thing to do. The Santander Preferred Current Account pays a fixed rate of 5% on balances up to £2,500, as long as you pay in £1,000 a month and switch over your direct debits. Stick £2,500 of savings in there, then set up a couple of monthly standing orders to transfer £1,000 in one day and out the next - and you'll earn £125 in interest in a year.

4) Get out of debt

Finally, there's perhaps the most common financial resolution of all, getting on top of debt. But it's worth it, because at their worst, credit cards can cost a horrifying sum. Assuming, for example, you were to borrow £1,000 at 17% and repay the minimum. It would take you over 25 years to pay off the debt, and you'd end up paying almost £2,000 in interest. Even if you were to pay back a pretty hefty chunk every month - like £100, it would still take three years to pay off, and cost almost £150 in interest.

Switch that debt to the market-leading 0% balance transfer card, the Barclaycard Platinum 22 Month Visa card and you won't pay an interest for 22 months. This will allow you to pay off your debt more quickly, as 100% of your payments go towards clearing your debt - potentially saving you that £2,000 in interest.

5) Get rewards

If, by doing this, you can work your way back onto an even keel, you have the chance to use credit positively. If you get your balance back down to zero, and can honestly say you won't let it get out of control again, you can start to use credit to make money. Cashback and reward cards will give you money for everything you spend on the card.

One of the most generous at the moment is the American Express Platinum Cashback Card, which pays 2.5% cashback, for three months - up to £100. After that, you earn 1.25%, plus 2.5% during your anniversary month.

Compare credit cards and cash ISAs at lovemoney.com