There’s nothing quite like the start of a new year to give us all a fresh perspective.
If money is on your mind, then take heed – here are our top 10 resolutions to get you financially fit in 2022.
Ensure you have an emergency fund
This financial new year's resolution top tip is slightly catch-22: those with sufficient incomes will probably already have a decent level of savings stashed away should there be any unexpected financial potholes in 2022.
Those who struggle to balance their personal payments may not feel they have funds to save for an emergency. With too much going out every month, how on earth do you save?
It’s not easy and will take planning and willpower. The key is putting away small regular amounts that are not so easily missed, rather than committing to large but unrealistic monthly amounts.
First ensure that you have a separate account for your savings and one that is easily accessible should you need to withdraw funds at short notice. Higher yield savings accounts may not allow you to do this, or have penalties for early withdrawals.
Next, set up a small amount, roughly £10 per week for those on the tightest budgets, to automatically transfer into your savings account.
Then, the absolutely critical part – forget about it. Forget this fund even exists, until you look at it in December 2022 and see you now have £480 saved!
Reassess your utility providers
Inertia is the friend of all utility services, as they tend to rely on slowly increasing your annual premiums without you noticing.
Take note of when your broadband deal and any digital TV subscriptions end. Consider mobile phone contracts at the same time as most companies now offer large discounts should you have line rental, TV and phone consolidated with the same provider.
The same also applies to home insurance, life insurance and car insurance, plus any other more cover you might have, such as annual holiday and/or pet insurance.
Don’t let those premiums creep up stealthily – use a comparison site or do your own research, then ask your current provider to price match the cheapest alternative or switch.
This is one of the most satisfying money-saving resolutions, when you review just how much you’ve managed to save each month.
If you’re on a mortgage rate that’s coming to an end soon, be sure to speak to a mortgage broker to help you find a new, ideally better, deal.
Save for retirement
For some, the level of contributary pension can be a deal breaker when deciding on a new employer. For others, a pension is an unwanted monthly deduction that, unlike national insurance and income tax, is optional and therefore ignored.
Whatever your age, putting in place the right pension should take top priority in your personal finance resolutions for 2022. With so many options and providers, this is one area that really benefits from the knowledge a financial adviser brings.
If you take one thing away with you from this article, it’s to make the time to sit down and think about your finances. Saying ‘I’ll do it when I get the chance’ often translates to things never being achieved.
Create a budget – and stick to it.
Make 2022 the year that you stick to your budget by putting some helpful steps in place. If you share your financial decisions with someone else, like a partner or family member, then discuss and agree a budget together and write it down.
The same goes for if you’re making all the decisions yourself – write your budgets down and keep them somewhere that they can be easily referred to.
The key to creating a budget is to make it realistic. Work out your income versus expenditure, taking account of any known changes to your finances for 2022.
Keep things simple by setting up direct debits for all your regular, fixed costs and factoring these into your budget.
When it comes to variable costs such as gas and electric, food, petrol etc, look back on your previous payments and calculate the mean cost over the last 12 months, taking into account any price inflation. If you’re aiming to spend less, then set a lower budget and stick to it.
Plan for knowns, allow for unknowns
Or in other words, expect the unexpected. We’re living in uncertain times with a global pandemic that looks set to evolve and continue through 2022. Inflation in the UK recently hit a 10-year high, with the Bank of England reacting by increasing the UK base interest rate from 0.1% to 0.25%.
All of the above indicates a year of price increases to both businesses and end-consumers. Make sure you resolve to keep abreast of financial updates and adjust your finances accordingly. This could mean switching to a savings account with a higher interest rate, for example.
Optimise your portfolio
Your new year’s financial goals should also include optimising your portfolio. Your investment mix for such an uncertain period should be diverse.
The markets like certainty, which will be hard to find in 2022, so consider moving your money into commodities which are more likely to hold steady against the boom and bust of more sensitive holdings.
With predicted fluctuations and market movements, regular assessments of your investments will be crucial. What looks like a hot gain in January may be dead-loss by September.
Prepare your will
Preparing your will is easier than ever these days and most financial advisers will be able to put you in touch with a solicitor who can help you with this often overlooked part of personal finance.
If you have any assets and dependants, then a short amount of time now will avoid a lot of wrangling later on. It will also give you peace of mind that your wishes for your estate will be carried out should something to happen to you.
Get your property valued
Property values have shot up in many areas of the UK in 2021 as a result of low supply and high demand. According to The Guardian, the average increase in value across the UK was £25,000.
Staying at home more through the pandemic has led to many people re-evaluating where they live, so the value of your home could have gone up.
Whether you own your home with a mortgage or outright, it’ll stand you in good stead for your new-year goals to know how much equity you have in your property.
Knowledge is power and knowing exactly how much equity you’re sitting on can only help inform your personal finance decisions in 2022.
Pay yourself first
If you’re self-employed, always try to pay yourself first. Often, leaving your own salary payments until all other outgoings are sorted can mean you end up not getting paid.
As well as paying yourself first, you should also put away sufficient funds to cover future expenditure including holidays, sickness and a pension.
Clear your debt
As previously mentioned, interest rates in the UK have just risen, and while they are still pretty low, the predictions for 2022 are for a continued trend of inflation controlling interest-rate hikes.
With this in mind, now is the time to start considering your debt burden. This links into budgeting nicely as you may need to make sacrifices in order to pay down this debt.
Again, make time to sit down and look at your outgoings and see where discretionary spend, such as a Netflix subscription or take-away orders, could be exchanged for funds to pay off debts over the year.
You may also wish to look at consolidating debts into a single payment at a potentially lower interest rate.
Of course, to ensure all of your financial goals for 2022 happen as planned, getting the right financial advice for your circumstances is key.
You can find your perfect financial adviser at Unbiased, or alternatively for more guidance on setting your financial goals, you can learn how a financial coach might also be able to help you.