Setting Realistic Financial Resolutions For 2022

So many of us set goals and resolutions at the start of the year, but how many do you keep for the whole year or manage to achieve?! The 1st January hits and you may feel invincible and 100% going to hit every resolution you have, but you may be pushing yourself too much. Just like a diet, if you push yourself too hard with your financial resolutions you’re likely to fall off the bandwagon.

Too many of us approach financial resolutions with the best of intentions, but with the wrong goals. It’s all about having realistic financial resolutions that you’ll actually be able to stick to.

I’m going to max out my ISA allowance this year

An ISA is a great way to save money as it’s tax-free (up to £20,000 a year). And you can usually get more interest than with a regular savings account. But with the full annual ISA allowance at £20,000 that would mean saving £1,666 a month which is a big ask. Especially because the tax year runs from April to April, so if you’ve not added to it yet that’s a few months to save a lot of cash.

Realistic financial resolutions

To start with change your main goal to max out my Lifetime ISA. A lifetime ISA cap is at £4,000 a year and is counted out of the 20K ISA limit. But a lifetime ISA gives you a government bonus if you’re saving for either your first property or for retirement. Maxing out this ISA will only need £333 a month which is far more realistic for most people.

You should also set up direct debits from your current account for the day after payday to drip-feed money into any of your savings. This way you’ll get used to not having the money to begin with. And you can always add more as the month progresses.

I must start investing now

While having financial investments is really important and a great way to save longer term you need to look over your finances and check it’s the right next step for you. If you lack an emergency fund or you have high-interest debt you’re likely to be better off using your money there.

Realistic financial resolutions

This one completely depends on where you are financially. But if you don’t have an emergency fund, work on saving around three to six months of living costs to begin with. This is so important to ensure you can survive if you were to lose your job or be unable to work.

If you have this ticked off look at all of your debt and if you have anything high interest like credit or store cards, or payment plans, think about using your money to clear these off first. Then once these things are done look into investing some money.

I’m not going to buy coffee or lunches out ever again

This one may be far more achievable if you’re still working from home as there’s less temptation than being in the office. But we all know how nice it is to buy a coffee or a lunch when you’re going into the office. Or just on a day out.

Realistic financial resolutions

Set yourself a limit or target so you can still enjoy the odd treat every now and then. If you cut out something you enjoy entirely you’ll end up resenting your budget. Then you’ll be more likely to fall off. Perhaps the right limit is one coffee a week, or one lunch a month. This way you won’t feel like you’re missing out. Plus the coffee or lunch you do have will feel like even more of a treat when you have it.

Pension related realistic financial resolutions

If you’re employed look at cranking up your pension contributions, especially if your employer is matching them. You can use a pensions calculator to work out how much you should be saving. But set a realistic target for yourself. Or you could look at upping it bit by bit so it’s not a huge bit in one go.

If you’re self-employed check how many years of national insurance contributions you have to ensure you’ll be eligible for the full state pension when you retire. You can check how many years of contributions you’ve made through the Government Gateway, which you need to register for. If you’re missing any you can make backdated payments for the past six years. Then look into either upping your private pension contributions or setting up your own pension.

Do you have any financial resolutions for 2022?

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