10 new year financial resolutions to get your finances on track in 2022

As we head towards the end of 2021, it’s natural for you to start looking ahead to what 2022 may bring.

To my mind, the start of a new year is the perfect time to think about what’s important to you, and the impact this has on your personal finances.

I therefore thought it might be an ideal time to suggest 10 new year financial resolutions that will help you get you on the right financial track in 2022.

1. Take some time to understand what’s important to you

With all the TV channels showing repeats, and films you’ve seen a dozen times before, the Christmas break gives you the ideal opportunity to take a step back.

Spend some quiet time thinking about your core financial values. It might help to write down your thoughts, even just in simple note form.

Try and establish why money is important to you. Some questions that could prompt and guide your thinking include:

• What opportunities do you want to give your children?
• What are your priorities – travel and adventure, meaningful work, continual learning?
• When do you want to stop work, and what do you want your retirement to look like?

Once you have a clear idea of your financial drivers, you can look to make all your future financial decisions through this lens.

That will make it more likely that the decisions you make will be good ones.

2. Increase the amount you’re investing to more than you’re comfortable with

Look through your financial paperwork, or online records, and work out how much money you’re saving and investing each month. This will include all your pensions and investments.

Then, take a deep breath, and increase the amount you contribute to an amount with which you aren’t totally comfortable.

My experience advising clients has taught me that, if you find saving easy, then you’re probably not saving enough for your future.

The effect of compounding means that increasing the amount you save annually will make a significant difference to your future prosperity. So, resolve to increase your contributions each year.

3. Get a deeper understanding of how you save and invest

As well as making sure you’re saving enough each month, it can also help your financial decision-making if you have a good understanding of how much you save, and how you invest.

Two key things to check for are:

• The percentage of your monthly income you save each month.
• The proportion of your savings that goes into equities. These are the holdings that will drive investment growth and your future financial success.

Both are crucial to your financial wellbeing. I intend to include articles on both in my newsletters early in the new year.

4. Automate your savings and investment process

Many people will wait until the end of the month to see how much “spare” money they have before setting aside savings.

Avoid this temptation by setting up direct debits at the start of each month. This will ensure that your future self becomes one of your financial priorities.

5. Get a clear understanding of your financial position

If you haven’t already done so, set up a simple spreadsheet listing your monthly household income and outgoings.

Without this knowledge, you’ll find it close to impossible to control your spending and cashflow.

There are some useful tools that can help you manage and analyse your expenditure. Email me – adam.rideout@fosterdenovo.com – and I’ll happily share one with you.

6. Make a will, or review your existing one

Many clients I speak to admit to that making a will is on their “ought to do” list, but it never actually gets done. A will is probably the most important financial document you can make, yet research from Will Aid shows that nearly half of adults in the UK don’t have one in place.

Making a will ensures that your wealth is passed to your chosen beneficiaries. It also gives your loved ones one less thing to have to worry about.

If you haven’t already done so, make 2022 the year you set up your will.

7. Maximise your pension contributions

Pensions are one of the most tax-efficient ways of saving money. The tax relief on your contributions means that saving into a pension should be a top financial priority.

If you’re already contributing the maximum you can, don’t forget that you can “carry forward” unused allowance from previous tax years.

Also consider making contributions for your spouse or partner. Even if they’re not earning, you can pay £2,880 into a pension for them each tax year, which will be topped up to £3,600 with tax relief.

8. Set up an ICE file

If you were incapacitated, or the worst happened and you passed away suddenly, would your loved ones or executors know where to start with managing your finances?

By setting up an “in case of emergency” (ICE) file on your computer you can help avoid a lot of future problems. This document should include details of all your finances, including pensions and investments. It should also include insurance and utility details.

If you’re unsure of the things you should include in your ICE file, again drop me an email and I’ll send you a document that should help you.

9. Resolve not to leave financial issues to the last minute

At the start of the year, resolve to complete financial tasks on time, rather than putting them off to the last possible minute.

As well as being good practice, it actually makes sound financial sense to do your tax return as soon as the tax year ends, and fund your ISAs at the start of each tax year.

10. Ensure your family are protected

How confident are you that your loved ones would be able to comfortably manage if you hadn’t woken up this morning?

By the same token, will you be able to manage if you’re unable to work for an extended period, or ever again?

Death or serious illness are difficult things to think about. But, as new year resolutions go, ensuring your family are protected is one of the best you can make.

Get in touch

If you want to talk through your own financial plans for 2022 and find out how I can help you, please give me a call on 07769 156 250.

Please note

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.

Foster Denovo Limited is authorised and regulated by the Financial Conduct Authority.

The Financial Conduct Authority does not regulate school fees planning, taxation & Trust advice and Will writing.