Opinion: How to be financially fit in 2022

Updated 8 hours ago

NEW YEAR, NEW you, new finances? It might not sound very good, but there is some truth to it. The fresh start of a new year sparks self-improvement plans with a generally emphasis on healthier lifestyles. Being in good financial shape should also be part of this plan.

Now that Christmas Day has passed and the excesses that come with it are reflected, many of us are going to turn our attention to our bank balance and wonder how we’re going to organize a little more for 2022.

The Irish are big savers overall – recent figures from the Central Statistics Office showed a record € 135 billion in Irish household deposits. While some over the past two years during Covid have managed to save money by working remotely and not socializing, it must be recognized that others in certain sectors of the economy have faced financial peril. .

Not everyone is sitting on a pile of savings, but the good news is that while you’ve been through month-to-month so far, there are small changes you can use to help you become more financially secure. The most important thing is that you can get to a point where you feel like you are in control of your money.

The links between finances and well-being

Research shows a strong link between healthy finances and good physical and mental well-being. It is also said that there is a strong link between positive mental health and healthy finances.

In London, a pilot program called Financial Shield, which has 2,000 participants in the boroughs of Lambeth and Southwark, runs until September 2022. The pilot project involves general practitioners prescribing financial counseling sessions for people with problems. long-term health.

Under this program, financial support officers will help patients claim benefits, grants and manage their debts. The program will include a cost-benefit analysis to measure results and an independent review to encourage national deployment across the UK. So it makes sense that if you want to improve your health and well-being for 2022, you should also review your financial health.

How do I get there?

But what does it mean to be in good financial health? That implies:

  • Have a financial plan where you are fully aware of your income and expenses
  • Live within your means and not overburden yourself financially
  • Establishment of an emergency fund equal to approximately six months of living expenses
  • A regular savings or investment plan
  • A retirement and retirement plan that meets your future expectations

If you think your financial health could be improved, here are some ways you can tackle it:

1. The first step is to set financial goals for the coming year. Keep them simple and achievable, and make sure they relate to your life goals. For example, instead of just deciding “I want to invest / save for the future”, be specific like “I want to invest my savings to grow them by X% over the next 10 years”.

Being specific with your goals will make it easier to put in place an achievable plan to achieve them and make your journey toward those goals measurable. Being able to measure and track your progress will help keep you on track and motivated.

2. Don’t worry about short-term success in January., which is a tough month to go through anyway. Any realistic examination of financial health should take a medium to long term approach. Use the month of January to set goals, make plans, and set up direct debits.

3) Evaluate all your financial expenses – savings, investments, retirement, insurance, life insurance. Go through each one and shop as they are renewed. You can do it yourself or hire an independent (commission-free) financial advisor to do it for you.

I always advise people to make sure that any financial advice pays off and is unbiased. All too often, financial advice is commission-based, which can confuse matters, meaning that brokers don’t always act solely in the best interests of their clients.

Commissions make brokers encourage their clients to invest in particular products, which can mean a better deal for the broker, not necessarily the client. Investors rarely know how much they are paying in commissions because these are presented in a very complex way.

4) Direct debits are obvious and extremely useful in establishing good savings or retirement habits. The money disappeared from your account before you could spend it. It’s a lot easier than trying to do a detailed budgeting exercise. The amounts of the withdrawals can be revised over time upwards or downwards depending on your level of income.

5) Take a look at your tax payments. Can you save taxes, especially if you are self-employed or a business owner? Is your salary at the right level and are you receiving all the tax breaks and refunds available?

Maintenance is the key

Just like maintaining physical health and fitness, achieving your financial goals requires consistency and focus. This often involves reframing your thinking and incorporating best practices into your day-to-day transactions.

It’s about building the resilience of your finances for the benefit of your current and future self, as well as that of your family or dependents. Being in good financial shape will help you feel positive and confident about your current financial situation and your future.

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Really, it comes down to the peace of mind knowing that your money is working as hard as it should. And once you’ve mastered financial health, the next step is financial freedom. Plan your financial health today and your future self will thank you.

David Quinn is Managing Director of Investwise Financial Management and provides financial planning, retirement and investing advice to people looking to invest in their future.