New Year Clock

New Year New You – Could a Financial MOT be in Order?

The New Year is a time to reflect on the previous one, and WOW – wasn’t 2020 just something? And we don’t mean that in a good way! Many people across the globe have found 2020 the hardest year yet, for many reasons. 

In our lifetime, we have not experienced a global pandemic quite like it, and the effects that COVID 19 has had on our lives have been enormous and long lasting. Many people have lost their jobs, financial stability, family members, and have come out of the year with more depression and anxiety than ever before. In fact, the British Medical Journal said that “the mental health impact of the pandemic is likely to last much longer than the physical health impact” [source – BMJ].

If you have been part of a lockdown in your country, then the psychological effects of such a quarantine can have damaging effects on the brain, increasing the chances you will feel loneliness, anxiety, frustration, sleeplessness, and a lower self-worth. Throw into that debt and financial instability and many families may be feeling especially concerned and stressed at this time of year.

With the New Year approaching, we can find ways to learn from the previous year and try to start the next one off on the right foot. If finances are your issue, then why not conduct a financial MOT on your home incomings and outgoings to establish a better framework for 2021. However hard you  have been hit by COVID 19, this is a good thing to do every year as finances can alter and outgoings increase or decrease naturally.

So, how do you conduct a financial MOT? There are many things you might want to consider in your financial MOT, but they broadly consist of the following:


Calculate your latest income figures for every member of the household to figure out exactly what you have coming into the house each month. It is best to calculate things by month, because this is how most bills are also calculated and so you have a better idea of what is leftover at the end of each period.


This can be tricky because you probably have a lot more going out, from bigger payments, like your rent, to smaller ones, like a subscription to a music library or even one-off payments that can be difficult to slot into a spreadsheet. Talking of spreadsheets – make one! You can find templates online that allow you to input your data and it will do the hard work for you. You might also want to make a simpler version at home. Spreadsheets are the best way to get a full picture of your financial health!


In order to get an accurate view of your finances, you must include any debt, such as loans or credit card payments. Try and make the same payment to your credit card each month as a way of paying off the interest faster and having a stable amount of money coming out of your account each month. If you simply just pay the minimum repayments each month, you may find debt stacking up and it becoming more difficult to settle. Find a realistic sum you can afford each month to resettle the debt. If you are struggling to meet loan repayments, speak to your lender directly.


By changing your spending habits, you will be able to improve your spending and get on track to a brighter financial future. One simple tip could be using cash instead of relying on your credit card. [source – Wonga]. They say, “Instead of using your credit card, rather opt to use cash – and follow the rule that if you can’t afford to buy an item that’s a definite want outright with cash, you should rather not buy it at all.” Changing habits in this way is an important step. Remember that changing any habit can take 21 days, or 21 attempts, so don’t expect it to come naturally – and don’t beat yourself up if you struggle to start with!

A financial MOT is a good idea for any household, no matter how they have been affected by the pandemic. Even those families that feel they have got through the crisis relatively unscathed might want to consider their financial positions as a matter of routine at this time of year, especially if you have overspent at Christmas!