Financial New Year’s Resolutions

“New Year, New You,” mantras have many starting new initiatives to shed bad habits and your finances can be the perfect place to start. It’s not only important to develop a few financial goals for the upcoming year, but to also find new ways to stick to them.

Participate in no spend challenges

A no spend challenge is exactly what it sounds like – a period where you try your hardest to avoid spending money. Excluding obvious essentials like rent, utilities and food, the goal of this challenge is to cut as many erroneous costs as possible. While a no spend challenge is more akin to a detox than a true lifestyle change, it can provide clarity on which expenses are necessary and which have just become bad habits. For example, if you’re in a rut of constantly ordering expensive takeout or ordering a car service for a walkable distance, forgoing those expenses can help you realise what is important enough to spend money on and what should be left in last year.

Create an emergency fund

According to the HSBC UK, it’s recommended that every individual has at least 3 months’ worth of living expenses in savings. Many financial advisers recommend this fund includes mortgage payments, utility costs, vehicle bills and any other vital expense that you would need in the event of a financial shock. Even if it doesn’t feel realistic to build up this large of an emergency fund in one year, it may be a great goal to work toward in coming years. After all, some savings is better than none.

Update your beneficiaries

If, like many, 2021 has been a big year for you and your family, it may be time to revaluate your beneficiary designation for pensions, bank accounts and insurance areas. After any large life event like marriage or a death in the family, many financial advisers recommend that you update your beneficiaries to reflect your wishes. Being prepared is never a bad thing, but these paperwork details can be easy to forget or procrastinate, making it a perfect resolution to set your mind to.

Start investing

There’s no time like the present to act on your financial goals. The appeal of using your money to make more money is something that ignites a lot of curiosity. While investing isn’t an uncommon practice, the new year can be a great time to learn more about where your money is going and growing. This includes creating a more diverse portfolio, understanding risk and potentially dedicating more of your income to investment.

Pay off debt

If you have accounts in the red lingering over your head, the new year may be a great time to dedicate your budget and pay off debt. Particularly with Christmas in the rear view, credit card debt can grow to unforeseen heights. Even if you’ve stuck to cash for gift buying, car payments, student loans and other advances may be dinging your sense of financial security. As you evaluate your budget for the new year, prioritising paying off debt can be highly beneficial to avoid interest payments and improve your financial stress.

Speak to a financial adviser

Of course, one of the best ways to decide which New Year’s resolution is right for you is to speak to a trusted financial adviser about what makes the most sense for your specific financial situation.

If you would like to speak with one of our financial planners, please don’t hesitate to get in touch over email at  enquiries@gpfm.co.uk or call 01992500261.

This article is for information only and must not be considered as financial advice. We always recommend that you seek independent financial advice before making any financial decisions. Investments can go down as well as up and you may get back less than you invested. 

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About gpfm  

gpfm are an independent financial planning company dedicated to the provision of personal, professional, and objective-driven advice for our clients. We have been awarded the Chartered Financial Planners title by the Chartered Insurance Institute for offering high quality, independent and informed advice that meets the needs of our clients.