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Friday 29th March 2024

Financial goals and how to achieve them in 2022

Financial goals

Do you want to stay on top of your financial goals in 2022, despite higher fuel prices, energy bills and other costs?

There are still some solutions to staying on top of your game and thriving financially this year.

The New Year brings a great opportunity to reset, make a fresh start and commit to new goals.

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One in five (21%) adults in the UK said they planned on making New Year’s resolutions this year, according to mutual insurer Royal London.

The most common resolutions are:

  • to become healthier (36%), with a third (33%) of people specifically committing to exercising more
  • to improve their financial health by saving more (21%) or starting to invest (12%)

Jennifer Gilchrist, protection specialist at Royal London says: “Many of us use New Year’s resolutions to alter our behaviour and daily routines, making positive changes in the process.

“Often people commit to making positive change from a health perspective but might not appreciate that they can also benefit by saving money – and realising that may help to improve their motivation to stick to their resolutions.”

Financial Goals 2022

Here is a list of ideas for New Year’s resolutions for your money, what to be wary of, and ultimately how to accomplish your financial goals.

1. Stop ignoring money

Rising food, fuel and energy costs, and the economic impacts of the Covid-19 pandemic have created a big financial and psychological strain on how we manage our money.

But there’s no better time to start planning than during the New Year – because if not now, then when?

Burying your head in the sand won’t make your financial issues go away, so face them with courage and reflect on your earnings, savings, and any debt that you might have.

Facing your money can be as basic as making sure you check your money apps, look at your bank statements and figure out where your money goes. If you don’t have a basic view of how money is being spent, then you can’t expect to be able to manage it better.

Making a detailed budget, or at least having a list of monthly costs and a general idea of other outgoings will make a huge difference to helping you budget. Money apps can be really helpful too but can also not give you a perfect picture if you have money spread across more than one account.

2. Cut your bills and spending

The easiest and quickest way to save money is to cut some of your bills. Once you make a budget for your household you should have an idea of where money is being spent the most.

If you’re on fixed price deals for a phone, broadband, insurance or other similar bills, make sure to negotiate at the end of the contract before renewal to get a better price. It can be as easy as calling up your provider to ask, instead of just accepting the renewal.  

If your initial negotiation with your current providers doesn’t work, find a comparison website and choose a cheaper alternative.

Try looking at your spending too. Grab your last three bank statements and credit card bills and spend some time going through them, highlighting any areas where you think you’re spending money unnecessarily or spending too much.

Look for specific shops where you might be overspending. You might be spending too much on easy-to-use sites like Amazon, ASOS or any others that encourage you to spend on a myriad of things you don’t really need.

Finally, look out for any subscriptions you don’t really use and could cancel to save yourself a bit of cash. Netflix might be a great service but if you’re only watching one or two movies a month, it might not really be worth it. Think the same for places like the gym if you’re not going often.

3. Pay off debt

What a better way to start the year on a more positive note than to start paying off your debt? Depending on your debt and earnings, you could choose to take small steps at first, and to make each small achievement rewarding.

One in five people want to pay off debt (20%), and it’s the most common New Year financial resolution according to Hargreaves Lansdown.

Sarah Coles, senior personal finance analyst, Hargreaves Lansdown says: “The New Year is a time for optimism and making plans to put our finances right.

“If you need help controlling your debts, you can approach a debt charity like Stepchange. If you need help with other aspects of your finances, there’s plenty of information online including the Money Helper website, as well as the sites of financial firms.”

A financial plan could make you feel like you’re staying on top of your finances, making it easier for you to look at your debt and slowly, but surely pay it off.

If you don’t know where to start – typically a good rule is to pay off the most expensive debts first – credit cards and similar high APR products. If you have multiple debts, try using the ‘debt snowball’ method. What’s The Cost has a great snowball calculator you can try, and it will show you how much interest you’ll pay, and what to pay each month to clear your debt. 

4. Start saving

Once you’ve got a handle on your costs and are making a dent or have cleared your debt, you can think about saving for the future.

Having a rainy-day fund is really important as it can help protect you from the shock of unexpected costs and is a better alternative than resorting to credit (that you might have just paid off!).

Kate Smith, head of pensions at Aegon says: “The general financial uncertainty created by the pandemic has highlighted the importance of financial resilience.

“Going into a new year with fresh uncertainty surrounding the coronavirus crisis, developing good budgeting skills and savings habits and growing emergency funds will give peace of mind and help to build financial resilience for any future unexpected expense.”

Using your rainy-day fund is up to you. You could set a high barrier to it, such as if you lose your job, or suffer a major financial loss such as a stolen phone or computer.

Or you could use it as a general fund for anything unexpected – from a minor repair to your car, or an unforeseen bill.

The advantages are noticeable. If you save money, you can have more financial security and freedom. That way, you get to enjoy greater security in life, with an extra pot for emergencies.   

Not only do you get to feel more secure in your finances, but you could also start saving for your other future goals.

As for how much you should save – that is up to you. Typically the ‘rule of thumb’ is to save between three and six months of your earnings. But if you have family who could help you in an emergency, that much money might be better used elsewhere, such as for a house deposit, or invested for the long-term.

Read our The Great Resignation series for more inspiration here: ‘My lockdown-inspired business idea now turns over £1 million’

5. Start investing

Once you have sorted these aspects of your finances, you’re in a position to start investing some of your long-term savings, to help it grow as much as possible for your future.

It could be into a Lifetime ISA (LISA) for a house deposit, or into an investment ISA for the longer-term future, or even more money into your pension for retirement.

Even if it means starting small, you could build your wealth in time, just by taking that first step into the unknown world of investments.

Find what you would like to invest in – is it in the shares of a company or start-up, crypto or even ethical funds? You’ve got plenty of choice.

Be aware to make your research before making investments. Major investment platofrms typically offer reams of information and ideas on getting started, so make sure to do some reading and learn what would be right for you.

Photo by Markus Winkler on Unsplash

Dana Raer

Reporter

Dana is a former reporter at Mouthy Money, having previously worked for Times Money Mentor and the BBC.

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