Top 5 financial resolutions and how to stick to them!

Written by Lori Campbell on 13th Dec 2021

As we approach 2022, many of us will be reflecting on the year gone by and vowing to do a few things differently come January. After another year of uncertainty largely caused by the pandemic, this will likely include making some financial resolutions.

A new survey by Hargreaves Lansdown reveals the most common financial change people want to make is to pay off personal debt – something one in five (20 per cent) of UK adults want to get sorted next year.

Next is lowering household bills, with 17 per cent of those polled saying this is a top priority now that energy prices are soaring. In third place is a promise to pay more into savings (15 per cent).

The fourth most common financial resolution Brits want to make is understanding where they stand with their pension (eight per cent), which can often be complicated especially the more we move jobs.

In joint fifth place is starting to save, and putting more into pensions (seven per cent each).

If you want to make more of your money in 2022, here are five top tips for sticking to your financial resolutions:

1. Work out where you are

It’s always worth using an hour or so on the quieter days between Christmas and New Year to take stock of your debts, savings, pensions and any investments. Make a comprehensive list so you can see exactly where you are starting from.

2. Set your targets

The next step is working out where you want to be. When it comes to debts, the goal is usually to pay down any expensive debts. For savings, it’s building an emergency savings safety net of three to six months’ worth of essential expenses (if you’re working age).

For your pension, the Pensions and Lifetime Savings Association says for a moderate retirement a single person needs £20,800 (including their state pension) per year, and for a more comfortable one they need £33,600.

When you’re working out how much you need in your pension pot to reach your goal, it’s not unreasonable to work on the basis that you might be able to take four per cent of the pot a year (although the actual amount you can take will vary depending on the income produced).


Change your pension for good with our Good Guide to Pensions


 

3. Draw up a budget

This isn’t what anyone wants at Christmas, but it lies at the heart of making all your resolutions a reality. Work out what you have coming in and going out, then use an online calculator to play with the figures, so you free up a lump sum of cash each month.

Part of this process is making sure you’re not overpaying on your bills. Right now, soaring energy prices mean you can’t get a better deal than the price cap, but you should keep an eye on changes over the next few months, and in the interim you can still shop around for mobile deals, media and broadband.


Make planning easy with our Good Guide to Financial Planning


 

4. Use the cash you free up to hit your top priority first

Start by controlling your debts. If you have debts, it’s worth seeing whether you can switch them somewhere less expensive, so more of your monthly payments can go into paying them off. Then with the extra cash you have freed up, set up a monthly direct debit to pay them down as quickly as possible.

Once the expensive debts are paid off, you should have more extra cash in your budget, which you can use to buy any insurance cover you need to protect your family.

You can also redirect part of your monthly direct debit into a savings account, to build up emergency savings, and part into your pension to make up any shortfall.


If you come into a sum of money, see our Good Guide to what to do with an Inheritance


 

5. Then invest

Once you have sorted these aspects of your finances, you’re in a position to start investing, and making the most of your money for the long term.


Get started with our Good Guide to First Time Investing


Good With Money occasionally uses affiliate links in articles, which means if you open an account with a provider after using the link, we are paid a small referral fee. 

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