Your five best financial resolutions for 2022
As we enter another new year, what are your hopes and dreams for 2022?
An estimated 40% of adults in the UK intend to make resolutions for 2022. According to research by GoCompare, the Top Ten resolutions for 2022 in the UK are likely to be:
- To lose weight.
- To eat a healthier diet.
- To do more exercise and get fitter.
- To spend more time with family and friends.
- To take more care of mental health.
- To sort out finances and cut back spending.
- To travel more.
- To take up a new hobby, sport, or interest.
- To be more environmentally friendly.
- To look for a new job.
In this article we focus on the resolution to sort out finances and cut back spending. Here are five ideas for how to do this: your five best financial resolutions for 2022.
These five resolutions are:
- Earn more money.
- Spend less money.
- Pay off debts.
- Save more money.
- Invest for the future.
We will suggest five practical tips on how to do each of the above.
How to earn more money in 2022
- Look for another job that will pay more. Many employers are reporting job shortages at the moment, so now could be a good time to make the move.
- Take on some extra work to supplement your current job. Perhaps a couple of shifts in a local bar or restaurant, or a Saturday job in a store, salon or library.
- If you have skills or talents to offer, why not consider setting up your own business as a sideline? Whether you can do web design, proofreading, cake making, photography, sewing or anything else, there may be people out there willing to pay you for your services.
- Sell unwanted goods. Why not declutter your home and make money at the same time? Whether you sell online or locally, and sell a variety of goods or focus on one specialist area, you could make a nice little profit from this.
- Make money from any spare space in your home. Whether you list on AirBnB, take in a lodger, rent out your driveway for parking or your shed for storage: if you have space to be used there may be money to be made.
How to spend less money in 2022
- Get the new year off to a good start by creating a realistic monthly budget then working hard to stick to it. Knowing how much money you have coming in and going out, and tracking your spending carefully, is essential to sorting out your finances.
- See if you can get a better deal on bills such as energy, phone, TV, broadband, and insurance. You can compare the cost of different providers on websites such as Money Supermarket, Compare the Market and USwitch.
- Start planning your food shopping more carefully. Our article How to save money on food shopping contains lots of hints and tips about how to do this.
- When buying clothes and household goods, don’t automatically buy new. You may be able to find top quality nearly new goods from charity shops, local ads, or online sites such as eBay, Facebook Marketplace and local social media groups.
- You could save a lot of money on personal services – for example hairdressing, spa treatments, decorating and DIY, gardeners, babysitters, pet sitters etc if you can find friends and neighbours to trade favours with.
How to pay off debts in 2022
- Why not make 2022 the year when you climb out of debt? Start by taking a long hard look at everything you owe, and working out how much you are spending on debt repayments every month. Imagine being free of all that, and use this as your motivation.
- Now decide the order in which you are going to pay your debts back. Some people like to start with the smallest one, to get a quick win, Others prefer to tackle the one with the highest rate of interest. Start paying everything you can into that first debt to see it start to shrink. Any extra money – including from the above tips on earning more money and spending less – can go towards this debt.
- Make sure you still keep up with all your other debt repayments during this period so that your credit score will not be affected. And avoid sliding any further into debt, otherwise this will undo all your good work.
- If you have any savings it’s a good idea to pay some into your debts. Interest rates are low for savers at the moment, so your money could achieve a better result by reducing your debts.
- If you have a lot of different debts, and find it hard to keep track of them, you may find it helpful to take out a new unsecured loan to pay them all off and be left with only one monthly payment to make. You could then concentrate all your efforts on paying off this one remaining debt.
How to save more money in 2022
- An estimated 25% of households in the UK have less than £1,800 in savings, and many people wish they had more. Experts suggest that you should aim to have a financial cushion of at least three months’ living expenses in savings.
- Ideally you might want to aim to save a regular proportion of your income. Expert advice differs on this, but a popular theory is the 50-30-20 rule. The way this works is that you would spend:
- 50% of your income on essential living expenses – mortgage/rent, bills, transport, food etc;
- 30% of your income on non-essential spending – socialising, entertainment, clothes, holidays etc;
- 20% of your income on saving money and/or paying off debt.
- Don’t be discouraged if you are not currently in a position to divide up your income in terms of 50-30-20. Start saving whatever you can. Simply open a new bank or building society account and set up a direct debit to pay money into this account every month. Even if this is only a very small amount to start with, you are taking the first steps towards building savings.
- Find fun and creative ways to add to your savings. Make it a personal challenge. Each month you could try something new to raise a bit more money towards your savings.
- It is also worth checking whether you are entitled to any more money than you are currently getting. For example, make sure your tax code is correct, and that HMRC have all your up to date information, so you are not paying too much. Also check whether there are benefits you may be entitled to. Every extra penny from any different source could help to boost your savings.
How to invest for the future in 2022
- Most people think of savings as fairly short term, either as an emergency fund or perhaps to buy something specific. But it’s never too early to think about long term savings. So if you already have some savings, it’s worth moving some of them into another account to start up long term savings.
- If you can lock money away for longer there are various savings schemes that could earn you more interest on your money rather than a normal bank or building society account.
- Notice accounts.
- Premium bonds.
- Stocks and shares.
Our recent article I want to save money – but where? covers this topic in more detail.
- One excellent way of saving for the future is to have one or more pensions. So if you are in a job with a workplace pension, make sure you are enrolled in it and also find out if you could pay a little bit more into that pension scheme on top of the standard contributions. You could also set up a private pension either as well or instead of a work pension. Either way, pension contributions usually benefit from tax relief, making it a cheap way of investing for the future.
- Another sound investment is property. Our recent article Will you ever be able to get on the property ladder? explains different ways to buy a home, including how to take advantage of the 95% mortgages currently on offer. Even if you have to scrimp and save to get your first property, it could pay dividends in the long term.
- Last but not least, the key to your future lies to a great extent in your own hands. So another worthwhile investment to consider in 2022 is in yourself! If you have always wanted to gain more educational or vocational qualifications, but it never seemed the right time to do so, then perhaps that time is now?
Even if you need to make sacrifices or take out an unsecured loan to finance your training, it could be well worth it in the long run by opening up a new world of opportunities for your future..
We hope that the above tips on how to achieve your five financial resolutions are helpful. We will provide more information about many of them during 2022, so do remember to check back in with us again soon at Simple Fast Loans.
We wish you and your family all the very best for 2022, from all of us at Simple Fast Loans.