James Clear’s 2018 book Atomic Habits is a million-copy international bestseller. Its central premise is that success isn’t the product of once-in-a-lifetime transformations, but of the slow build-up of small changes, which in time, become daily habits.

With the UK currently in the grips of a cost of living crisis and a lengthy recession forecast, times are likely to get tougher in 2023.

Keep reading for some simple – but hopefully habit-forming – financial tips that will make it easier to make the most of the next 12 months.

1. Begin by getting organised

Time off over the festive period is a great for relaxing. But it could also be the perfect opportunity to get financially organised ahead of the new year.

Dig out pension paperwork, find receipts and invoices ahead of the self-assessment tax return deadline, and check in with investments.

An “In Case of Emergency (ICE)” document can be useful for collating contact details for scheme providers and important documents.

Having everything up together in January will mean only small revisits are needed throughout the year to keep your paperwork up to date.

2. Create or revisit long-term financial plans

Having a long-term plan in place creates a roadmap to life goals, as well as the signposts that mark the way.

Remember that life milestones can shift our priorities while global events might mean a plan needs revisiting. At Boolers, we conduct regular reviews of all our clients’ plans.

Checking in early and asking the right questions – Do my investments need rebalancing? Do the protections I have in place still make sense for my situation? Is my retirement on track? – means starting the year on a strong footing.

3. Draw up a household (and personal) budget and stick to it

With inflation soaring, the cost of borrowing on the rise, and tax increases imminent, working to a budget is key.

Within a household, this can help to keep energy costs under control and ensure the household food bill remains manageable.

On an individual level, a budget means living within your means and ensuring that you pay your future self first, even when times are tight. That means continuing to make pension contributions, maintaining an emergency fund, and contributing to investments.

Maintaining regular payments is a simple form of habit-building that could reap huge benefits for your clients years from now.

4. Start saving for a child or grandchild

It’s never too early to start saving for a child or grandchild. The longer the term of an investment, the more opportunity there is for investment growth and the greater the effects of compounding.

Whether it’s a Junior ISA or a pension, money put aside now is an investment in a loved one’s future. The money might help a child through university, onto the housing ladder, or provide stability in retirement.

HMRC’s gifts from regular income exemption is the perfect way to make regular, tax-efficient payments of this kind.

5. Make the most of your allowances

Speaking of pension and ISA wrappers, a good habit to get into early is to make full use of all available allowances, if it’s affordable.

The annual ISA subscription limit is £20,000 for the 2022/23 tax year (across all ISAs held). The limit for a Junior ISA is £9,000.

An individual can contribute up to £40,000 (or 100% of their pensionable earnings, if lower) into a pension each year and still benefit from tax relief.

Getting into the habit of checking in with allowances could make a real difference over the years until retirement.

6. Keep an eye on debt as interest rates rise

As the Bank of England (BoE) continues to increase interest rates in the short term, the cost of borrowing will continue to increase. Alongside the base rate, Kwasi Kwarteng’s mini-Budget had a huge impact on mortgage rates across the market.

Keeping track of debt will be more important than ever in 2023.

Consider paying more than the minimum repayment on credit cards, overpaying a mortgage (while factoring in early repayment charges) or shopping around for a new deal, and avoiding “buy now, pay later” schemes.

7. Protect loved ones through protection policies and an up-to-date will

Around half of UK adults don’t have a will in place. Of those that do, many won’t be up to date.

It’s important that individuals have a will in place but crucial that it becomes a habit to check in with it regularly. Life events like marriages, deaths, divorces, and births can all make a difference to our priorities and mean a will needs updating.

Likewise with protection products. Some company pensions offer life insurance or other forms of cover, but what happens when you change jobs?

Checking in with current protection provisions means starting the new year with peace of mind that loved ones will be looked after, whatever 2023 brings.

Get in touch

If you have clients who would benefit from help with any of the topics raised in this blog – from household budgeting to debt management and financial protection – please get in touch. Email enquiries@boolers.co.uk or call 0116 240 7070.

Please note

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.