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How to fix your finances in 2022

Financial planning is more than just spending less and saving more. We delve into the topics that are often overlooked, but could make for a brighter financial future.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

This article is more than 6 months old

It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.

So much has changed in the last two years, and no doubt your finances will have too.

The pandemic uncertainty has made financial planning difficult. But January is a time for new beginnings and planning ahead.

In this article, we take a look at the top financial things people want to focus on in 2022. And why simply spending less and saving more might not be enough for a brighter financial future.

This article is here to help you learn about financial planning and where advice could fit in. But the information and tips given here aren’t personal advice. If you’re not sure what’s right for you, ask for financial advice.

Top areas of financial focus for 2022

When we asked people which aspect of their finances they wanted to get sorted next year, the most common answers were*:

  1. Paying off debt (20%)
  2. Getting cheaper bills (17%)
  3. Put more cash aside for emergencies (15%)
  4. Understanding their pension (8%)
  5. Start an emergency savings pot (7%)
  6. Putting more into their pension (7%)
  7. Protecting their family if they can’t work (5%)
  8. Start investing (5%)

This more or less lines up with how you should be thinking about ordering your financial goals. Your first priority should usually be to pay off outstanding debts and set aside cash for a rainy day. Looking at comparison sites for cheaper bills and using a household budget calculator can help.

But financial planning is more than just spending less and saving more. You should also think about what you want for your financial future and how you're going to get there.

To help you, we’re going to dig into the less common financial fixes. By focusing on them now, you can help build financial resilience and set yourself up for the future.

*HL survey conducted by Opinium, 2,039 respondents in September 2021.

1. Protection for you and your family

Insurance or financial protection could provide an income for you, or your family, if you’re not able to work or you pass away. Some examples include life insurance, critical illness insurance or income protection.

But even if you don’t have any financial dependents or a mortgage to pay, certain policies could still be very valuable. Just think about how you’d fare financially if you couldn’t work for six months or longer.

We think financial protection is key to building financial resilience and a more secure future, so it’s worth looking into. You can find out more on the 5 to Thrive section of our website.

Our advisers can help you make sure your family are looked after financially in the event of ill health or death. As well as looking at insurance, they can help you navigate more complex areas like long-term care and estate planning.

Don’t forget, having a cash buffer is also essential to help you cope should you be unable to work or have a reduction in income. Read more about rainy day savings.

2. Get to grips with your pension

No matter how old you are, getting your head around your pension now can help you get on track for the retirement you want.

Start by looking through old paperwork or logging in to your pension online to see how much it’s worth and where it’s invested (if at all). You could then use our online calculator to see how much your pension could be worth when you retire.

Pensions are a vital part of financial planning, but can be complex. For something so important, you might want to get the advice of an expert. A financial adviser could help you understand what pensions you have, whether you’re on track, and whether pension consolidation could make things easier.

If you’re planning on retiring soon, you should seriously consider retirement planning advice. There are a lot of options to consider, and the decisions you make could affect the rest of your life. An adviser can take some of the burden and help you choose something that’s right for your circumstances.

If you’re over 50, you can get free, impartial guidance about your retirement options from Pension Wise.

More on financial advice

3. Investing

If you’ve not tried investing before, 2022 might be the year to start.

It’s a smart way to make your money work harder so you can hopefully have more later. There’s always the risk your investments could go down in value meaning you get back less than you put in. So you should look to build up a decent cash buffer first, and only invest if you’re happy with the risks and with money you don’t plan to touch for at least five years.

You also don’t need a lot of money to start investing. You could even put away a small amount, say £25, each month. And you don’t need to pick individual shares either, funds can be a great option for any investor.

Learn about investing

For a professional perspective, consider taking advice

It can be tough to see the wood for the trees when it comes to your own finances. There are a lot of details to think about and different factors to weigh up. And it can be difficult to have a completely objective opinion about your own money.

Taking financial advice can give you perspective. You focus on your goals for the future, and they focus on the details.

If you’re thinking about taking financial advice, the first step is to book a call back from our advisory helpdesk. They won’t provide advice on the call. But they can talk you through how advice works, and the charges involved, so you can get a better idea of whether it’s right for you.

Book a call back

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    Important notes

    This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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