There’s no better time than the end of the year to review your finances and come up with some new strategies. After 12 months of paying off debt, saving or investing, now is the time to take a closer at what worked and what needs adjustments in the year ahead.
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Your year-end financial checklist
Get 2022 off to a flying start with these five valuable tips to improve your financial health.
1. Do an end-of-the-year review
How did you do in 2021? If you had a budget, how well did you stick to it? If you didn’t, identify the areas where you did poorly and need to come up with a better plan.
How do your savings look compared to last December? Is your emergency fund still intact or do you need to work on building it up again? Did you accrue or pay off credit card debt? If you haven’t checked your credit report recently, do so to see how things look. Now is the time to correct errors if you spot any.
2. Plan for large expenses coming up in 2022
If the pandemic has taught us anything, it’s that sometimes you don’t know what’s around the corner. But there are definitely things you can plan for. This could be anything from large home renovations or a major purchase to a wedding or a long-overdue holiday abroad.
Whatever you’re hoping to achieve in 2022, if it’s going to require money, now is the time to plan for it. Will you need a loan for it? If not, how much do you need to save for it?
3. See where you are in your debt journey
The average credit card debt of households in the UK is currently £2,033. This is down from £2,592 last year and marks a healthy decline due in part to people not being able to spend so much during lockdowns.
But with many people ready to spend again, now is the time to deal with your debt before it climbs back up.
Make a list of all your debts, including their balances and interest rates. If your credit score is decent, consider switching your debt to a new card with a 0% introductory period to save on fees. Otherwise, create a monthly repayment plan that you can afford to help lower your debt in the new year.
4. Make one top financial New Year’s goal
There’s nothing wrong with setting several New Year’s resolutions, but pick one financial goal as your main one –whether that’s to start investing, pay down your credit card debt or save a certain amount. If things get difficult financially at some point, you can always focus on your main goal for a while until you can rearrange your budget.
5. Review your investments
Check your investment accounts to review how things have progressed during the year. Could you increase contributions to your retirement accounts next year? What about starting a separate investment portfolio in 2022? There are a number of trading platforms that make it easy to invest, even if you’re a beginner.