As 2022 draws to a close many of us begin to ponder our New Year money resolutions – with personal finances stretched tighter than ever.
After all, 2022 was the year that the cost of living crisis really began to bite, with price hikes ranging from energy bills to mortgages and food.
With that in mind, money has never been higher on the agenda – even if prices are so high it feels like things like saving or investing are harder than ever.
But more than a third (35 per cent) of us will make a financial resolution this year, according to investment platform Hargreaves Lansdown.
New year, new me? More than a third of people are making a financial resolution for 2023
These ambitions range from saving more to spending less and putting money aside to help loved ones.
Of course, many New Year resolutions end up being broken by the time January is up.
Hargreaves Lansdown senior personal finance analyst Sarah Coles said: ‘In the wake of horrendous price hikes and the subsequent financial carnage of 2022, unsurprisingly an awful lot of us are keen to get back on track financially in the new year.
‘More than a third of us will make at least one financial New Year’s resolution, with debts, savings, pensions, investments and protection all in the frame.
‘However, if they’re going to last us beyond the 2nd January, we need to take the right steps to ensure we keep them too.’
Women are slightly more likely to make a money resolution, with 37 per cent doing so compared to 33 per cent of men.
These are the most popular financial goals – as well as expert advice on how to hit them.
Saving more: 12%
The most popular financial goal is to put more money aside.
It is such a simple idea, but the cost of living crisis has made this harder than ever to actually do.
Coles said: ‘We’re aware of how much more expensive life is, and that the tough times aren’t yet at an end, so we want to save more in 2023.
‘However, if this just remains a vague notion instead of a serious plan, it’ll fall by the wayside.’
Coles said the best way to save is to set up a direct debit from your current account to a savings deal with a decent interest rate.
However, make sure you can afford the money you put aside, and that you put it into a deal overseen by the Financial Services Compensation Scheme, which pays out if a firm goes bust.
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Spending less: 11%
If we imagine saving more as one side of a coin, spending less is the other side.
However, price hikes in areas such as energy bills, rent, mortgages and food make budgeting tricky.
Around two-thirds of people have already cut back on non-essentials and half have cut spending on their essentials too, according to the Office for National Statistics (ONS).
Swaps: Switching to supermarket own-brands or budget stores can help to cut spending
Coles said: ‘The easiest way to stick to this resolution is not to make it too difficult.’
Start by shopping around for the things you need to buy – which 6 per cent of us plan to make our resolution anyway. Consider budget brands and low-cost supermarkets too.
Next, cut out anything you don’t get enough value from. Old direct debits are a useful place to start, but it can be a good idea to give yourself at least an hour to think through any potential purchase, so you cut out bad habits and impulse buys too.
Paying down debts: 7%
One in four people have borrowed more compared to a year ago, according to ONS figures.
Around seven in every 100 people want to pay off debt in 2023, but it should be higher up the list of resolutions than it is.
That is because financial advisers say paying off debt is almost always the priority above saving money.
Back in the black: Seven in every 100 people plan to pay off debts next year
The best way to become debt free is to make a solid plan. Work out how you’re going to cut back to free up the money you need to pay off debts.
Then set up a direct debit to pay off the debt with the highest interest rate first. That way, you’ll be doing the right thing without having to remember to do it every month.
Saving for the future: 5%
First on the list of popular resolutions is saving for short-term expenses, but in fourth place is saving for the future.
Five per cent of the 2,000 people polled by Hargreaves Lansdown want a bigger pension, 4 per cent want to start investing and another 4 per cent want to increase how much they invest.
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Coles said: ‘We’ve been so focused on our immediate problems that a lot of us have neglected our long-term plans, so it’s a great idea to get them back on the radar.
‘They don’t come ahead of paying the bills and dealing with debt, but they need to happen or you’ll regret it later.’
Similar to saving more, the best way to meet this resolution is to set up a regular, affordable payment into a pension or investment and stick to it.
Only invest money you don’t need right now, and remember that the value of investments can fall as well as rise.
Last Will and Testament: Planning what will happen to your money and assets after you are gone is also a New Year goal for some
Making a will: 4%
The British are bad at talking about death, so it is a good thing 4 per cent of us want to make a will in 2023.
Passing away without a will can mean extra complications for your loved ones.
There are two main ways of making a will – the DIY way, which is cheap or free, or by using a solicitor.
Coles said: ‘If the thought of drawing up a will is too daunting for you to get started, check if any of your local solicitors will offer a free initial conversation.
‘You can ask if your circumstances are straightforward enough to tackle with a free DIY will, or whether you need the help of a professional.
‘If you do need help, then commit to saving something each month towards the cost, which will drive you into doing something about it sooner rather than later.’
Potential for growth: Investors are preparing for a potential recession in 2023
Investing to beat a recession
Meanwhile many investors are preparing for a possible recession hitting in 2023.
Around a quarter (23 per cent) are keeping their portfolios exactly the same, according to stockbroker Interactive Investor.
However, 13 per cent are increasing their exposure to stocks and 10 per cent are looking for more defensive investments.
Around 7 per cent of investors are putting more money into safe cash accounts.
Lee Wild, head of equity strategy at Interactive Investor, said: ‘While we don’t know exactly what will happen next year, we do know that the UK economy will likely spend at least some of it in recession. And that’s by far the biggest worry among respondents to our poll.’