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As 2022 draws to a close, many of us are starting to think about our New Year’s resolutions – with personal finances tighter than ever.
After all, 2022 was the year when the livelihood crisis really started to bite, with price increases ranging from utility bills to mortgages and food.
With that in mind, money has never been higher on the agenda – even when prices are this high, it feels like things like saving or investing are more difficult than ever.
But according to investment platform Hargreaves Lansdown, more than a third (35 percent) of us will make a financial resolution this year.
New year new me? More than a third of people make a financial resolution for 2023
These aspirations range from saving more to spending less and putting money aside to help loved ones.
Of course, many New Year’s resolutions are broken by the time January is over.
Hargreaves Lansdown senior personal finance analyst Sarah Coles said: ‘In the wake of appalling price increases and the ensuing financial carnage of 2022, it’s hardly surprising that very many of us are eager to get back on track financially in the new year .
“More than a third of us will make at least one financial resolution for the new year, with debt, savings, pensions, investments and protection all in the frame.
“But if they last beyond January 2, we need to take the right steps to make sure we keep them.”
Women are slightly more likely to make a money resolution: 37 percent do this compared to 33 percent of men.
Here are the most popular financial goals – as well as expert advice on how to achieve them.
Save more: 12%
The most popular financial goal is to set aside more money.
It’s such a simple idea, but the cost of living crisis has made it harder than ever to actually do it.
Coles said: ‘We are aware of how much more expensive life is and that the hard times are not over yet, so we want to save more in 2023.
“However, if this remains a vague idea rather than a serious plan, it will go off the track.”
Coles said the best way to save is to set up a direct debit from your checking account on a savings account with a decent interest rate.
However, make sure you can afford the money you set aside and put it into a deal overseen by the Financial Services Compensation Scheme, which pays out if a company goes bankrupt.
>> Find the best savings rates using our independent best buy tables
Spend less: 11%
If we imagine that saving more is one side of a coin, spending less is the other.
However, price increases in areas such as utility bills, rent, mortgages and food make budgeting difficult.
According to the Office for National Statistics (ONS), about two-thirds of people have already cut back on non-essentials and half have also cut back on their essentials.
Swaps: Switching to own brands from supermarkets or budget stores can help cut spending
Coles said, “The easiest way to stick to this resolution is to not make it too difficult.”
Start shopping around for the things you need to buy — which 6 percent of us plan on making our resolution anyway. Also think of budget brands and cheap supermarkets.
Then cut out anything you don’t get enough value from. Old direct debits are a helpful starting point, but it can be a good idea to give yourself at least an hour to think about a possible purchase so you can also avoid bad habits and impulse buying.
Pay off debts: 7%
One in four people has borrowed more than a year ago, according to figures from ONS.
About seven in 100 people want to pay off debt by 2023, but it should be higher on the list of New Year’s resolutions than it is.
That’s because financial advisors say paying off debt is almost always a priority over saving money.
Back in the black: Seven out of 100 people plan to pay off debt next year
The best way to become debt free is to create a solid plan. Think about how you will cut back to free up the money you need to pay off debt.
Then set up a direct debit to be the first to pay off the debt with the highest interest. That way you do the right thing without having to remember to do it every month.
Save for the future: 5%
First on the list of popular New Year’s resolutions is saving for short-term expenses, but fourth is saving for the future.
Five percent of Hargreaves Lansdown’s 2,000 respondents want a higher pension, 4 percent want to start investing and another 4 percent want to invest more.
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Coles said: ‘We’re so focused on our immediate issues that many of us have neglected our long-term plans, so it’s a great idea to get them back on the radar.
“They’re not anticipating paying the bills and handling debts, but they have to happen or you’ll regret it later.”
As with increasing savings, the best way to meet this commitment is to establish and stick to a regular, affordable deposit into a retirement or investment.
Only invest money that you do not need now and remember that the value of investments can go down as well as up.
Last will and testament: Planning what will happen to your money and possessions after you are gone is also a New Year’s goal for some
Making a will: 4%
The British are bad at talking about death, so it’s a good thing that 4% of us want to make a will by 2023.
Death without a will can bring additional complications for your loved ones.
There are two main ways to make a will: do it yourself, which is cheap or free, or with the help of an attorney.
Coles said: ‘If the thought of drawing up a will is too daunting for you to get started, check if one of your local solicitors is willing to offer a free initial consultation.
You can ask if your circumstances are easy enough to handle with a free DIY will, or if you need the help of a professional.
“If you do need help, commit to saving something each month to cover expenses, so you’ll do something about it sooner rather than later.”
Potential for growth: Investors are preparing for a possible recession in 2023
Investing to beat a recession
Meanwhile, many investors are preparing for a possible recession in 2023.
According to stockbroker Interactive Investor, about a quarter (23 percent) keep their portfolios exactly the same.
However, 13 percent are increasing their exposure to equities and 10 percent are looking for more defensive investments.
About 7 percent of investors put more money in safe money accounts.
Lee Wild, head of equity strategy at Interactive Investor, said: ‘While we don’t know exactly what will happen next year, we do know that the UK economy is likely to spend at least part of the year in recession. And that is by far the biggest concern among the respondents to our poll.’
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