The period between Christmas and the new year is traditionally a time for relaxing with your family, watching festive films on television, and eating turkey leftovers.

It’s also a good time to start thinking ahead to the coming year, and part of that often involves making new year resolutions.

Here are my seven suggestions for new year financial resolutions. Following these, if you don’t already, should help you get your finances under control and improve your financial wellbeing.

1. Set up an ICE file

My first suggested resolution is for you to set up an “In Case of Emergency” (ICE) document.

This is a simple file that brings together all your key financial information in one place. This means that, if anything happens to you, your family will have immediate access to all your financial details without having to search through reams of paperwork or a drive full of different folders.

When you’re thinking about what to include in your ICE file, ask yourself what the key information is that they’ll need to access and run your affairs. This will very likely include:

• Details of all your financial arrangements including investments, pensions and other savings
• Contact details of your solicitor, accountant and financial planner
• Policy numbers of your insurance documents.

Once you’ve got your ICE file set up, let your spouse or partner know of its existence, plus any password required to access it.

2. Make a will, or check your existing one

Most people know that they, and their spouse or partner, should make a will.

In spite of this, research from Will Aid shows that close to half of adults in the UK haven’t made one.

Dying intestate means a solicitor will distribute your assets in accordance with official legal guidelines. This could potentially result in the people you want to inherit your wealth not doing so. It can also make the process of distributing your assets drawn out and subject to legal challenge.

A will is straightforward and easy to arrange, so there’s no real excuse for not having one. Make 2022 the year you make a will or, if you already have one, check it’s up to date.

3. Plan to clear your outstanding debt

Unsecured debt can be a big drain on your finances. Worse than that, if it gets out of control it can affect both your financial and mental wellbeing.

So, if you have credit card or store card debt, put a plan in place to either clear it, or reduce it as much as possible in 2022.

Start with the card charging the highest interest rate and work your way through them all one-by-one.

Clearing them will give your finances a real boost and give you one less thing to worry about.

4. Don’t leave things to the last minute

It’s always tempting to put off financial paperwork for as long as you can. Unfortunately, this can often result in you ending up doing it in a rush at the last moment.

Keeping on top of your financial affairs is not only a sound practice to adopt, but it can also save you money.

If you submit a self-assessment form, get it done now rather than at the 31 January deadline. You might need information from third parties, which could delay the submission and result in you facing a fine.

Then look to complete your tax return for the current financial year (2021/22) soon after the year end in April. You may well be due for a tax refund or higher-rate tax relief on your pension contributions. So, the sooner you receive this money, the sooner you can get it invested and working for you.

The start of a new tax year is also the time to maximise your ISA contribution for the same reason. Leaving it to the end of the year means you’ll have missed out on a year of potential tax-efficient investment growth.

5. Review all your regular outgoings

Make 2022 the year you get into the habit of regularly reviewing your household budget.

Start by taking some time out during the festive period to go through all your regular outgoings. With most of us banking online now, this should be a relatively straightforward process.

Cancel any mandates that are no longer valid, or that you feel you don’t need any more.

Query any amounts being collected that you aren’t sure of. You may well find that you’ve been over-debited, so will be able to start the new year off with a handy refund.

Then make a note to go through the same process again in a few months time.

6. Create an emergency fund

Take a few seconds to stop and think about what you’d do if you had a household emergency, such as flooding or severe storm damage to your roof.

Have you got enough money set aside to able to manage the impact, or would you have to resort to borrowing?

If it’s the latter, then you should make one of your 2022 priorities to set up an emergency fund.

As a rule of thumb, this should be between three to six months of your normal household income. Keep it in an easy-access savings account because, if you need it, you’re likely to have to get it at short notice.

7. Increase your pension contributions

Pensions are an incredibly tax-efficient way to save money, so you can give your financial future a boost by increasing the amount you pay into your pension fund in 2022.

For every £100 you pay into your pension, the government add an extra £25 in basic-rate tax relief, so that’s immediate growth, without you having to do anything.

Higher-rate and additional-rate relief make them equally attractive if you earn over £50,000 a year.

If you’re already contributing the maximum amount, don’t forget that you can carry-forward unused contribution eligibility from previous tax years.

Get in touch

If you have any queries, or need some guidance regarding any of the new year financial resolutions I’ve set out here, please get in touch.

You can email me at graeme@macfp.co.uk or call me on 01349 832849.