What are your New Year financial resolutions?
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Every year, New Year resolutions are made across the country but aren't always kept. Over half of people who make New Year’s resolutions don’t keep them, research found in 2016. What are some of the most common financial resolutions for 2022 and how can they be better kept?
The most common financial resolution is to pay off debt, which one in five people said they want to get sorted in the new year, a survey by Opinium for Hargreaves Lansdown found in September this year.
With energy prices rising, the second most common resolution was getting cheaper bills. The rest of the top five financial resolutions centred on saving.
Understanding pensions
Data released by the Pensions and Lifetime Savings Association in September revealed that over half of respondents are worried they are not saving enough for retirement, so it is no surprise that the fourth most common financial resolution is understanding where we stand with our pensions. Putting more into pensions also made it to joint fifth place.
One in 20 Britons have increased the amount they save into their pension since the beginning of the pandemic, according to the YouGov survey. This reinforces “the importance of saving into a pension, something that people have continued to do during a time of great economic uncertainty”, director of policy and external affairs at B&CE, Phil Brown, said
Savings on the rise
The Opinium survey found that 15% of respondents would like to pay more into savings and 7% want to start saving. This resolution is already in the works, as new research by YouGov shows that nearly three in 10 people have been able to save more money since the beginning of Covid-19.
“It’s very interesting to see that nearly three in 10 adults have been able to save money due to the fact they have spent a lot less on holidays and going out,” said Brown.
Will this trend continue into 2022, or will people get back into spending their money on going out and taking holidays?
Ways to make these resolutions happen
“There’s always a risk that we head into every year with the same things that we never get round to. However, there are five steps that can guarantee you nail all of the most popular resolutions, and more to the point – that you stick with them,” said senior personal finance analyst at Hargreaves Lansdown, Sarah Coles.
The investment platform has recommended five steps to help stick to these financial resolutions.
One is to work out where you are. It recommends taking an hour or so on quieter days between Christmas and New Year to take stock of debts, savings, pensions and any investments. After working out where you are, you can then work out where you want to be. For savings, that could be building an emergency savings safety net of 3-6 months’ worth of essential expenses.
For pensions, HL suggests taking on the PLSA’s advice on how much income you might need in retirement. It says for a moderate retirement, a single person needs £20,800 (including their state pension), and for a more comfortable one they need £33,600.
Another step HL recommends is drawing up a budget: working out what is coming in and going out. Part of this includes making sure bills are not being overpaid. With energy prices rising, there may be cheaper deals than your current plan and keeping an eye on these changes can be helpful.
The last two recommendations are to use the money that has now been freed up to hit priorities, then invest. Hitting these priorities may involve controlling debts by finding somewhere less expensive and using the extra money to set up a monthly direct debit to pay them down as quickly as possible.
Any additional money after this can be used for emergency savings and to put into a pension. Once these aspects have been sorted, it can create room to start investing and making the most out of your money long term.
“The New Year is a time for optimism and making plans to put our finances right. It’s only a couple of weeks later when it usually becomes a time for disappointment and failure. But this year doesn’t have to be the same as every other, because there are some straightforward ways to make your resolutions stick,” said Coles.
The most common financial resolution is to pay off debt, which one in five people said they want to get sorted in the new year, a survey by Opinium for Hargreaves Lansdown found in September this year.
With energy prices rising, the second most common resolution was getting cheaper bills. The rest of the top five financial resolutions centred on saving.
Understanding pensions
Data released by the Pensions and Lifetime Savings Association in September revealed that over half of respondents are worried they are not saving enough for retirement, so it is no surprise that the fourth most common financial resolution is understanding where we stand with our pensions. Putting more into pensions also made it to joint fifth place.
One in 20 Britons have increased the amount they save into their pension since the beginning of the pandemic, according to the YouGov survey. This reinforces “the importance of saving into a pension, something that people have continued to do during a time of great economic uncertainty”, director of policy and external affairs at B&CE, Phil Brown, said
Savings on the rise
The Opinium survey found that 15% of respondents would like to pay more into savings and 7% want to start saving. This resolution is already in the works, as new research by YouGov shows that nearly three in 10 people have been able to save more money since the beginning of Covid-19.
“It’s very interesting to see that nearly three in 10 adults have been able to save money due to the fact they have spent a lot less on holidays and going out,” said Brown.
Will this trend continue into 2022, or will people get back into spending their money on going out and taking holidays?
Ways to make these resolutions happen
“There’s always a risk that we head into every year with the same things that we never get round to. However, there are five steps that can guarantee you nail all of the most popular resolutions, and more to the point – that you stick with them,” said senior personal finance analyst at Hargreaves Lansdown, Sarah Coles.
The investment platform has recommended five steps to help stick to these financial resolutions.
One is to work out where you are. It recommends taking an hour or so on quieter days between Christmas and New Year to take stock of debts, savings, pensions and any investments. After working out where you are, you can then work out where you want to be. For savings, that could be building an emergency savings safety net of 3-6 months’ worth of essential expenses.
For pensions, HL suggests taking on the PLSA’s advice on how much income you might need in retirement. It says for a moderate retirement, a single person needs £20,800 (including their state pension), and for a more comfortable one they need £33,600.
Another step HL recommends is drawing up a budget: working out what is coming in and going out. Part of this includes making sure bills are not being overpaid. With energy prices rising, there may be cheaper deals than your current plan and keeping an eye on these changes can be helpful.
The last two recommendations are to use the money that has now been freed up to hit priorities, then invest. Hitting these priorities may involve controlling debts by finding somewhere less expensive and using the extra money to set up a monthly direct debit to pay them down as quickly as possible.
Any additional money after this can be used for emergency savings and to put into a pension. Once these aspects have been sorted, it can create room to start investing and making the most out of your money long term.
“The New Year is a time for optimism and making plans to put our finances right. It’s only a couple of weeks later when it usually becomes a time for disappointment and failure. But this year doesn’t have to be the same as every other, because there are some straightforward ways to make your resolutions stick,” said Coles.
