Saving money and getting out of debt will be a key priority for hundreds of thousands of people entering 2022. However, it can often be difficult to know where to begin and how to start to tackle challenging financial issues. Fortunately, there are five key tips any person can implement into their lives to ensure they end 2022 better than when they started.
The pandemic has had a mixed impact on people’s finances over the last two years, and many are just starting to get back on their feet.
Emma Watson, Head of Financial Planning and Advisory Services at Rathbone Investment Management shared top tips to help in 2022.
Firstly, she stated, Britons should start the year with clear financial goals, both for the short term and the long term.
This helps individuals to make the most of their money and establish good financial habits.
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Setting up direct debits for essential bills to go out on is likely to be key, as well as paying off debts as quickly as possible, especially those with a high interest rate.
Britons are also encouraged to set aside an emergency fund for unexpected expenses, which should generally be worth three to six months of income.
Although it is not possible for everyone to save this much, if a person tries to save little and often it could make a huge difference.
As a fourth top tip, Ms Watson recommended Britons regularly check their bank statements, as this can help people to keep tabs on their spending.
It is usually worth keeping in your mind an estimate of one’s current account balance as well before checking, as many people underestimate how much they spend.
Finally, Britons have been urged to consider the prospect of investing once they have saved.
Ms Watson said: “With interest rates on cash remaining low, for longer term goals it may be worth considering investing your savings, as doing so could help you grow your pot even further.
“Before you start investing, establish how much savings you need to keep in cash for shorter term priorities.
“As a general rule of thumb any money you invest should remain invested for a minimum of five years.”
Investment, however, is always a risk as people could get less back than they originally put in.
As a result, this should be carefully considered before individuals embark upon this option.
However, Ms Watson also said pension saving is a key part of an investment strategy.
The earlier a person begins to put money into their pot, the more prepared they will be for retirement.
Some people may benefit from seeking the help of a financial adviser to discuss their best options.