7 new year resolutions to improve your financial wellbeing
The start of a new year is the perfect time to review your finances. Taking action to improve your financial wellbeing can support your overall health and wellbeing now and in the future.
Here are seven resolutions that could have a positive impact on your finances in 2022 and beyond.
1. Make a budget and keep track of your spending
Setting out a budget can seem dull, but clearly setting out your income and expenses can help keep you on the right track.
Budgeting doesn’t have to mean cutting back, but it can help you focus on what’s most important to you. That may mean putting money away for your child’s future or for travelling in a few years. Just as important as setting out a budget is reviewing it regularly to ensure you are still on track to reach your goals.
2. Increase your pension contributions
If you’ve yet to retire, increasing your pension contributions can have a positive impact on your long-term wellbeing and security. You will benefit from tax relief on your pension contribution and as pension savings are usually invested, you could see a boost from long-term investment returns and the effects of compounding.
Increase the employee contributions in your workplace pension, and in some cases, your employer might increase their contributions to your pension too.
3. Boost your emergency fund
How much do you have in an emergency fund? Having savings to fall back on can provide peace of mind and security. You’ll know that you and your family will be looked after even if the unexpected happens.
From fixing a car and replacing a boiler to an accident or illness halting your workplace income, an emergency fund is there for when you need it most.
We would usually recommend having three to six months of regular expenses in an easy-access account.
4. Set up regular deposits to invest
While an emergency fund – held in easy-to-access cash – is important, once you’ve built your fund, consider investing too.
With savings rates low and inflation high, cash savings are liable to lose value in real terms. Making regular payments into your investment portfolio could help your money go further.
You’ll need to be sure you have a long-term goal in mind and understand your attitude to risk and your capacity for loss, so be sure to speak to us!
5. Set out a plan to reduce debt
Reducing debt is a great way to save yourself money in the long term. Setting out a plan to reduce any form of debt, such as credit cards or a mortgage, could save you money. But managing high-interest debt first will likely have the best outcomes.
Switching providers or making overpayments could help you to pay off the debt quicker and reduce the cost of borrowing over the long term. You’ll need to be careful of early payment charges and be sure that your new deal is better than your old one, but we can help you there too.
6. Review your will and Power of Attorney
Writing a will and naming a Power of Attorney might have been on your to-do list for a while. Make January 2022 the time when you finally get around to putting them in place.
A will is the easiest way to ensure that your wishes are carried out on death. A Lasting Power of Attorney (LPA), meanwhile, allows you to appoint someone to look after your affairs if you are no longer be able to.
If you already have a will and LPA in place, be sure to keep them up to date to ensure that they still align with your wishes. Life events like births, deaths and marriages can change your priorities and might mean that changes are needed.
7. Set out your long-term goals
New year’s resolutions will often focus on things you want to achieve in the next 12 months but thinking further ahead could be even more beneficial. Think about what you want your life to look like in 10 years and then consider putting a plan in place to get you there.
If you’re ready to review your finances and improve your financial wellbeing this year, please contact us. We put your long-term goals at the centre of the financial plan we put in place for you, helping you to make your dreams a reality.
Get in touch
If you’d like to discuss any aspect of your financial new year’s resolutions, get in touch. Please email us at firstname.lastname@example.org or check with your adviser.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.