Jeremy Tauri: Your plan of action

Jeremy Tauri.

- Write a plan: It's all well and good to say this will be the year you start saving but, if you haven't got a plan, it's unlikely to work. Write down (realistically) what you spend each week, what you might need for unforeseen expenses and what you can afford to save.

- Write some goals: It's hard to stick to any plan if you don't know what the final outcome will be. Work out some short and long-term goals to improve your financial situation. Allow yourself small rewards when you get to each one.

- Put the money destined for savings into your savings account on pay day, before you get a chance to spend it. No point aiming to save whatever is left over at the end of the pay period, as you will find there isn't any.

- Pay off dumb debt first. If you have money owing on your credit card, get rid of it before you start saving. The interest you pay on expensive debt will wipe out any benefit in having a separate savings account. Aim to pay off your credit cards in full each month.

- Increase your mortgage payments: If you haven't got any other debt, put as much money on your mortgage as you can. Any extra you can pay off will go directly on to the principal and make a huge difference to the amount you pay over the life of the loan.

- Set up automatic payments for your regular bills so you do not miss the payment dates and risk penalties. This is especially helpful for bills such as power, where you qualify for a discount when you pay on time.

- Start a plan to save for next Christmas. Some of the credit unions offer fee-free accounts with favourable interest rates that lock in your savings until Christmas. This is a good way to make sure you have money in the bank and don't have to turn to the cards next year.

- Close credit cards you don't need. They charge annual fees and, while people think they need one "just in case", you'd be better off saving the money.

Jeremy Tauri is an associate at Plus Chartered Accountants.