It hardly seems feasible that it can be 2022 already — wasn’t it the Nineties just the other day?! — but here we are… And while I strive to manage my money actively throughout the year, there’s just something about January that encourages us to kick-start the new year with the best of intentions. So without further ado, here are my top three financial resolutions for the next 12 months (and beyond)!
1. ISA allocation
Firstly, my favoured ‘tax-wrapper’ is a Stocks and Shares ISA, while for diversification I also pay cash into a Lifetime ISA.
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Now, it’s well known that the current total allowance that Brits can contribute to any and all ISAs is £20,000 each tax year. You may or may not be aware, however, that you can put up to £4,000 into a Lifetime ISA each tax year (and, once you have already opened one, you can carry on adding £4,000 each tax year until you are 50).
So my first financial resolution is to ensure that I pay £4k into my Lifetime ISA (in turn, the government adds a 25% bonus to any money you put in, so that’s a “free” £1k for me annually!) and strive to commit as much of the remaining £16,000 allowance as possible into my S&S ISA.
2. Credit card due diligence
Next up, I plan to re-evaluate whether the credit card I currently have – a British Airways American Express Credit Card – is still a good fit for me, or whether there’s another that can better suit my needs in the year ahead.
Originally, I chose this card for the ability to collect extra Avios points on everyday spend — and in particular, to reach the £20k threshold that was required to qualify for a BA Companion Voucher (essentially, a 2-for-1) that could be redeemed on selected flights across all cabin classes. Now, however, the threshold has dropped to £10k — but the voucher is only applicable for Economy class, which perhaps lessens its appeal for me (I’ve never once paid full price to fly myself and my wife Business Class, and I won’t start now!) That said, I don’t want to look a gift horse in the mouth, and maybe once I’ve researched the various perks that other credit cards offer, I might well decide that I’d rather collect Avios than receive cashback or alternative rewards, for instance.
3. Spring/summer/autumn/winter-clean my possessions
Anyone who’s been invited to my home in recent years — admittedly very few, due to the pandemic! — tends to remark on the lack of clutter. Not that I’ve watched her Netflix show yet, but I’m led to believe that one of Marie Kondo’s maxims is to ask yourself whether something ‘sparks joy’ for you. That’s music to my ears, and I’ve long followed a similar path. In fact, talking of Netflix, as soon as I started to become aware that streaming services were here to stay, I recognised my collection of DVDs (okay, yes, VHSs too) and CDs were going to decrease in value drastically, so I sold as many of them as I could with the appreciation that the vast majority would be accessible almost instantly through the likes of Netflix and Spotify. As a side effect, it seemed as though my home increased in size overnight!
I’ll also hold my hands up and admit to making some terrible fashion choices over the years — and seeing some of these when I went to decide what to wear of a morning sparked nothing but disgust! Once more, eBay has proven to be my friend whenever I want to streamline my wardrobe, while the likes of musicMagpie are useful in taking many of the physical media that don’t sell well on auction sites.
Foolish final thoughts
There you have it, my personal top three financial resolutions for 2022. But, of course, I’m not limiting myself to those listed above — I could write essays on everything from pension consolidation to supermarket savings, but I won’t (at least not today). My hope is that by sharing these plans of mine for the new year, perhaps it might encourage others to assess their finances and re-evaluate whether the financial products they’re signed up to are making their money work as hard as possible.
In the meantime, I speak on behalf of all of us here at The Motley Fool UK when I wish you a happy and prosperous New Year!