January is a great time to commit to making personal improvements in the year ahead. A recent survey reported by Statista revealed that Brits’ most popular resolutions for 2023 were to:
- Exercise more
- Save more money
- Eat healthier
- Lose weight
- Spend more time with family and friends
- Reduce spending on living expenses.
As you might imagine, financial commitments often feature heavily in these lists. So, if you want to take control of your money in 2023, here are five great financial new year resolutions you might want to consider.
1. Set achievable goals you can stick to
Many people end up failing to keep up with their new year resolutions simply because they are too hard to achieve. So, to remain motivated, it’s important that you set yourself targets that you can reach.
If you’re struggling to save £200 a month now, there’s no point setting yourself a target of saving £500 a month. You’re unlikely to be able to maintain this, and the disappointment if you fail may make you feel worse than if you’d never committed in the first place!
Achieving small, consistent goals can be better mentally and for your money. Hitting your goals is motivation in itself and makes it much more likely you’ll follow through on your resolution.
Examples of achievable goals you could set yourself include:
- Creating a more structured budget and sticking to it
- Saving or investing a set amount each month
- Improving your credit score
- Reducing your living expenses.
Whatever you choose, make sure you monitor your progress and reward yourself for achieving your goals.
2. Make sure to have an emergency fund
One of the ways that you can give yourself real peace of mind is by establishing an emergency fund.
This is a pot of money – held in an easy access savings account – that you can dip into when unexpected expenses arise. This might be for car repairs, fixing a leaky roof or a broken boiler, or even to cover a short period out of work.
Having money you can access if you’re in a tight spot means you don’t have to resort to expensive borrowing. It also means your other plans – your savings or pension contributions – can stay on track.
Experts recommend holding three- to six months’ household expenditure in your fund. If you’re self-employed or you work in a volatile sector, you might want to save more.
If you want to build up your financial resilience, resolving to create an emergency fund can help to reduce stress and reassure you that you have money available if you really need it.
3. Make sure you have enough protection
2022 research published by IFA magazine revealed that more than 1 in 5 Brits said that their financial struggles have had a direct impact on their mental health. Many reported suffering with stress, anxiety, or depression due to concerns about money.
The right financial protection can give you the peace of mind that you’ll receive an injection of capital when you need it. It ensures that you and your family have a safety net in place if the worst should happen.
Resolving to arrange your financial protection this January could help you to reduce your financial stress, improving your overall wellbeing. We can help you put the right cover in place to protect your income, health, and family.
4. Start the process of clearing your debt
With interest rates having risen sharply over the last 12 months, the cost of borrowing has become more expensive. So, 2023 could be a great time to start the process of repaying your debt if you can.
It can pay to start with high-interest debt such as credit cards or loans. Interest can build up quickly if you’re only making the minimum payments, so making a conscious effort to pay back these debts can put you on a secure financial footing.
It may help to revisit your budget first, so you can clearly see how much money you have available that you could commit towards clearing your debts.
5. Make sure all your documents are in order
It’s easy to put off your financial admin as it can be tedious and there always seems to be better things to do.
However, having the right documents and arrangements in place can provide you with genuine reassurance that you and your loved ones will be secure should anything happen.
There are three key steps you should take.
Write or update your will
A will ensures that your assets will pass to your chosen beneficiaries on your death.
If you have a partner and are not married, or you have children or stepchildren, this is a really important step to take; otherwise, when you die, your assets might not pass to the people you want.
If you already have a will, check that it is up to date and reflects any changes to your circumstances.
Create or update your Lasting Power of Attorney
A Lasting Power of Attorney (LPA) lets you nominate a trusted person to make decisions on your behalf if you can’t. This might be due to a period in hospital, an accident, or a loss of capacity due to dementia or Alzheimer’s.
A financial LPA lets someone you trust manage your financial affairs if you can’t, or you simply no longer want to. A health and welfare LPA is used when you lose capacity so your nominated attorney can make decisions about your care and medical treatment.
Make 2023 the year you put the right LPAs in place. If you already have them, check they are up to date.
Create or update your expression of wish forms
Your pensions don’t usually form part of the estate that is distributed through your will. Instead, you’ll need to ensure you have an expression of wish form in place for each pension you hold.
This lets you nominate how you would like your pension wealth to be distributed in the event of your death.
Make sure you have a form in place for each pension you hold, and that the nominated beneficiaries are correct.
Get in touch
If you want to take control of your finances in 2023, we can help. To find out how, please contact us by email at info@investmentsense.co.uk or call 0115 933 8433.
Please note
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.
Life Assurance plans typically have no cash in value at any time and cover will cease at the end of term. If premiums stop, then cover will lapse.
