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Financial New Year’s resolutions: Time to organise our finances

Financial New Year’s resolutions: Time to organise our finances alt

A new year, a new you. Or, at the very least for most of us entering 2021, a new sense of hope and gratitude that 2020 is behind us. Should we be making new year’s resolutions, or is there another way? According to Forbes, less than 25% of people stay committed to their resolutions after 30 days, and creating goals is by far the more effective way to stay on target.[1] But whether we make resolutions or set goals, one thing is for certain: we could all use the opportunity to organise, or reorganise, our finances.

Where do I start?

A good way to begin is by thinking about your finances at present, and what you’d like the picture to look like in the future. Make an effort to quantify your savings goals, and next, plan how you’re going to reach them.

We all want to feel a sense of stability in monetary terms, yet our own research found that 42% of us aren’t saving enough to consider ourselves financially secure.[2] And of this number, 31% said they do not have enough disposable income or feel they are in a position to build a level of financial flexibility because of other priorities. 2020 has taught us that a financial safety net is a crucial part of feeling resilient, and 2021 gives many of us the opportunity to build upon what we have learned, adding savings to our long-term to-do list.

Financial resilience

This brings us on to the topic of financial resilience, the importance of which we can’t stress enough. Amongst hundreds of other things the Covid-19 pandemic has highlighted is that some sense of financial resilience, and ideally, stability are crucial to one’s sense of self and peace of mind. Cushon research found that 78% of UK adults agree that the Covid-19 pandemic, and the unpredictability of the past year, has made them realise that having accessible savings is very important.[3] 

But it’s not just about the here and now. Given the ever-increasing age of the average member of the population (statistics from the Office for National Statistics tell us that, in less than fifty years time, there is likely to be an additional 8.6 million people over 65[4]) and how fragile our health might be as we approach later life, a pension and financial planning are vital.

There’s also the issue of complexity. We know that both employers and employees find pensions far too complicated,[5] our research has shown us that 68% of HR professionals believe that younger professionals simply aren’t engaged enough in pensions. Added to which, the current tax relief system is expensive and does very little to motivate people to save for retirement. In addition, higher-earning employees are limited in the amount they can contribute to a pension scheme unless they want to pay a tax charge. Nearly 40% of employers say that the issue of pensions tax relief for their higher earners is a challenge and they need to look for alternative ways to support and satisfy the needs of their employees.[6]

With a plethora of different savings options available, there really is something for everyone. And with the ability to save through a workplace savings scheme directly through pay, it really couldn’t be easier to start saving now, whatever your financial goals.

[1] https://www.forbes.com/sites/ashiraprossack1/2018/12/31/goals-not-resolutions/

[2] https://www.cushon.co.uk/blog/42-of-people-dont-think-they-are-saving-enough-to-be-financially-secure

[3] https://www.cushon.co.uk/blog/42-of-people-dont-think-they-are-saving-enough-to-be-financially-secure

[4] https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/ageing/articles/livinglongerhowourpopulationischangingandwhyitmatters/2018-08-13

[5] https://www.cushon.co.uk/blog/has-the-pensions-tax-relief-system-had-its-day

[6] https://www.cushon.co.uk/blog/has-the-pensions-tax-relief-system-had-its-day