Even if you’re not normally into making New Year’s resolutions, you should try setting some specific financial goals this year. After the last few years of turmoil and disruption, chances are your finances could use some special attention.
With 2022 in full swing, here are some suggestions for your financial new year’s resolutions:
Review your financial plan
You should review your financial plan at the same time each year to ensure you’re still on track to meet your goals. Make sure your habits and behaviours are aligned with what you want to achieve and take the steps to change anything you need to make them happen.
Keep in mind that you’ll have short, medium, and long-term goals, so some things might stay the same while you might need to shift others, but regularly reviewing your plans will help you keep your eye on the prize. If you’re not sure what a financial plan is, read our free ebook .
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Spend less than you earn and pay yourself first
If we were asked for one tip to revolutionise your finances, it would be this. Spending less than you earn helps generate a positive cash flow so that your bank account will have some left over at the end of each month. You can use this to pay off high-interest rate debts and invest anything you still have in order to grow your wealth.
Try to minimise discretionary spending – it’s not necessary to cut out all expenses, after all you still need to have fun – but cut back on extras that you don’t need.
To start paying yourself first, simply take the amount you want to contribute towards savings immediately once your pay cheque hits your account and transfer it to a special account (ideally through a standing order so you don’t forget) designed to hold your savings. Then you can spend whatever you have left and you’ll learn to live on the reduced amount before you even know it. If you meet your savings goals, then you can treat yourself to something special!
Maximise your ISA allowances
Each year, you’re allowed to save a maximum of £20,000 tax-free into Individual Savings Accounts. You can spread your allowance over the various types of ISAs. You can save into Cash, Stocks & Shares, Innovative Finance, Lifetime, or Junior ISAs. Some kinds have maximum contribution limits themselves – such as LISAs and JISAs – so pay attention to how much you can contribute. ISA allowances don’t carry forward, so you need to use it all before the end of the tax year or you’ll lose it.
Maximise deductions for all allowable employment expenses
At the time of writing you can claim any allowable expense you’ve incurred from 6 April 2017 all the way up to the current date. Given you can claim for educational and exam fees, it can add up to a significant expenditure which you can claim an income tax deduction on. It’s easy to reduce your tax bill but we provide a step-by-step guide to help you make your claim.
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Admin tip:
Be sure to keep an eye on your tax code throughout the year as sometimes your code will actually mean you under or over pay on tax. Ensure you keep track of all relevant important financial documents so you make your job easier when it comes time to do it. You can make claims every year, so be sure to be tax-aware.
Improve your wealth with these financial New Year’s resolutions and make 2022 a great year for your finances.
