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Feel good about your finances in 2023

For several reasons, not least the war in Ukraine, but also the effects of the pandemic and supply chain disruptions, inflation rose to 9.2% in 2022*. That means that the average cost of living increased by this amount compared to 2021. It wouldn’t be surprising if you felt stressed about the future right now. 

The good news is that inflation is predicted to slow down this year*. Of course we don’t know for a fact what the future will look like, but let’s face 2023 with a little bit of optimism. Looking at our finances and preparing for the future is guaranteed to make us feel safer and more confident about what’s ahead. We can use these four steps to help us prepare for the future – without breaking the bank. 

Learn to budget

Some say that living within our means is the key to happiness. Overspending, even by a small amount each month, leads to debt.

A budget helps us look at what’s coming in and what’s going out, to understand what’s essential and what isn’t. A simple budget can show you where to make savings and put you firmly in control of your money.

Tip - the 50/15/5 split:

  • 50% of your monthly income should go on essentials – your rent or mortgage, food, childcare, insurance…
  • 15% should be used on saving for retirement.
  • 5% should be tucked away in case of unplanned expenses and emergencies.

Want to get started?

Download a free budget planner and read some more useful tips about budgeting on our website.

Manage your borrowing

Borrowing money isn’t always a bad thing. As long as you manage it carefully and you’re able to meet your repayments without being over-burdened, it can be as much a part of your financial picture as your income.

But you should review your borrowing regularly to make sure it’s still affordable. We shop around when our insurance policies are due for renewal – why shouldn’t we also shop around for better loan terms? You might be able to reduce some of your repayments or overpay every now and again to clear a debt more quickly.

Short-term loans often attract higher interest rates so if you’re able to pay off a more expensive loan sooner, you’ll save money in the long term. Find out more about managing your debts.

Make sure you’re protected

An emergency fund is a good buffer if you’re hit by an unexpected bill. Try and have at least 3-6 months’ worth of income tucked away (remember the 5% budgeting tip).

Most of us have home and car insurance, but what about life assurance, income protection and critical illness cover? These are all policies designed to protect you and your loved ones should the worst happen, along with making a will to safeguard your savings.

It’s also useful to think about protecting your retirement fund by appointing a beneficiary. You can do that easily in PlanViewer. Find more useful tips on how to protect yourself and your loved ones.

Save for your future

With your finances under control, you can turn your mind to something a little more exciting – planning how you’re going to enjoy your retirement.

We all long for financial security and freedom – in fact, The Fidelity Global Sentiment Survey, 2022 shows that more than half of us are worried about not having a big enough retirement fund.

The good news is it’s never too early (or too late) to start planning for your future. The sooner you start, the more you can save – but even starting a little later in life and saving small amounts regularly can make a big difference. Just an extra 1% of your salary could boost your retirement savings. Don’t believe us? Take a look at ‘the power of small amounts’ and use the calculator to see how easy it could be to give your pension a boost.

Of course, investments can go down as well as up, which is why it helps to understand market volatility.

 

In a nutshell

  • Have an emergency fund – ideally 3-6 months’ worth of your salary 
  • Remember the 50/15/5 rule – to help you budget better
  • Recognise different types of debt – clear short-term loans as quickly as you can 
  • Investments can go down as well as up – be comfortable with your choices and understand market volatility 
  • Pay more if you can – a small amount extra each month can boost your retirement savings.

* Source: Organisation for Economic Co-operation and Development (OECD) - Inflation forecast

Important information - this is for information purposes only and the views contained are not to be taken as advice or a recommendation for any product, service or course of action. You should regularly reassess the suitability of your investments to ensure they continue to meet your attitude to risk and investment goals.

Investing basics

Want to learn more about investing but not sure where to start?

The power of small amounts

Use our calculator to see how a small change to your savings today can make a big difference tomorrow.