‘Work, plan, save’: 12 financial resolutions to help you prosper in 2023 | Personal Finance | Finance

Nobody has a penny to waste these days and the 12 financial resolutions may help you make it through the cost of living crisis.

1. Build a safety net. Putting money aside for a rainy day isn’t easy, especially today, but do your best, says Emma Watson, head of financial planning at Rathbones Group. “Keeping three to six months in an easy access savings account can protect against the next unforeseen emergency.”

2. Check bank statements. Make sure you know exactly what is going in and coming out of your account, and slash wasteful spending. “Always have a rough idea of your balance to avoid dipping into the red and incurring overdraft charges,” Watson says

3. Get saving. Rising interest rates have finally boosted returns on cash, even if today’s best buy deals pay below the inflation rate. It is still possible to lock into a two-year fixed-rate bond paying up to 4.4 per cent, says Anna Bowes, founder of Savings Champion. “Act fast as today’s best buy deals quickly get oversubscribed.”

4. Invest extra cash. If you receive a pay rise or money from any other source and don’t need it to fund your cost of living, pay the surplus into a pension or savings account, says Louise Rycroft, financial adviser at Timothy James & Partners. “This can help prevent the money being absorbed in your day-to-day spending.”

5. Read contracts. Check when your contracts expire for household bills such as insurance, broadband, digital TV and mobile phones. “Don’t just let them roll on as you could end up overpaying unnecessarily,” Rycroft says.

6. Pay down debt. If you have run up credit card debts over Christmas, consider switching them to a zero interest balance transfer card. “Always make more than the minimum monthly repayment, otherwise you will never pay it down,” says Sarah Coles, senior personal finance analyst at Hargreaves Lansdown.

If you have several debts, focus your firepower on paying down the most expensive first, while making minimum payments on all the rest.

7. Work to rule. Debt experts suggest following the 50/30/20 rule when spending money: 50 percent for essentials such as rent, mortgage and bills; 30 percent for “wants” such as hobbies, shopping or having fun; and 20 percent for paying off debt, making investments or contributing to savings. “Everyone is different, so tweak the 50-30-20 rule depending on your priorities,” says Alice Haine, personal finance analyst at investment platform Bestinvest.

8. Max out tax breaks. The tax take is that a 70-year high so fight back by saving inside your tax-free £20,000 Isa allowance, Morris says. “The capital gains tax exemption and dividend allowance are slashed in April so use them before then if need be.”

READ MORE: State pension to rise by double inflation but older people get less

9. Check your pension. If you have not yet retired, check your retirement savings and top them up if you can, says Carla Morris, financial planner at RBC Brewin Dolphin.

Claim tax relief on your personal pension contributions. “A £100 pension contribution costs just £80 if you’re a basic-rate taxpayer, £60 for a higher-rate taxpayer, and £55 if you’re an additional-rate taxpayer.”

The over 50s can get free, impartial retirement guidance through the government-funded Pension Wise service, available via Moneyhelper.org.uk.

10. Make or update your will. Writing a will ensures your assets go to the right people after you die, yet many never get down to it. If your personal circumstances have changed, say, following death or divorce, update it.

11. Check state pension. Make sure you are getting the maximum state pension, as underpayments are common. Many of the poorest pensioners fail to claim valuable means-tested top-up pension credit. If unsure, contact the Pension Service on 0800 731 7898 or visit Gov.uk.

12. Seek help. If you have serious debt worries seek free help from charities such as StepChange, Citizens Advice or National Debtline.

Shun debt management companies who charge a fee for their services, which will only make things worse.

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