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Mowatt Financial Planning: New Year Resolutions

Thursday, 12 January 2012

New Year Resolutions

It’s estimated that more than 26 million Britons will be making New Year resolutions this year. If you are one of them, you will probably have made yours by now. However, making the resolution is one thing but actually sticking to it is quite a challenge. Typically 86% fall within the first 6 months and 41% are broken by the end of January.

According to a survey carried out by GoCompare, sorting out our finances is the most popular resolution for 2012; overtaking perennial favourites such as “losing weight” and “getting fit”. Nearly half of Britons (49%) say that sorting out finances/reducing outgoings is their top resolution ahead of Getting fit/taking more exercise (46%) and Losing Weight (45%).

A separate survey by first direct looks at the Biggest Financial Regrets and the table below shows the top 3 regrets for the 2011 and 2010 surveys.

2011


2010


Not saving enough

52%

Not paying off more of my debts

53%

Not paying off more of my debts

33%

Not paying into a pension

37%

Not paying into a pension

13%

Spending too much on run up to Xmas and gifts

18%

Your own circumstances will determine whether you are more interested in paying off your debt quicker or saving more. They are obviously linked as reducing or getting rid of debt should free up some of your income to allow you to save more. The sharp rise in people regretting not saving enough is probably linked to the continuing poor economic climate. It maybe that action already taken in paying off debt and spending less on gifts has reduced the number of people with regrets in these areas in 2011.

The fall in people regretting not paying into a pension is surprising. I can’t believe that much has actually changed between the two surveys although maybe some of this regret is included in the not saving enough category.

Moving on from this, the first direct survey also asks the areas of their finances that Britons are most unhappy with. Again the top 3 in 2010 and 2011 are shown in the table below.

2011


2010


Not taking advantage of tax free investments

87%

Credit card and loan debt

82%

Credit card and loan debt

84%

Pension provision

80%

Pension provision

82%

Not taking advantage of tax free investments

79%

Clearly there is a link with the previous table between not saving enough and not taking advantage of tax free investments. Again pensions are high up on the list as well as paying off credit card and loan debt.

Having a financial plan is a clear way of helping achieve a New Year resolution based on sorting out your finances, whatever that means in your particular circumstances. Typically a financial plan will start with your current circumstances: assets, liabilities, income and outgoings and will look at the actions which you will need to take to achieve your goals.

At the start I mentioned that the majority of resolutions fall in the first 6 months. One way of improving the success of your resolutions is to share them with a family member or a friend or a third party. In the case of your financial plans, a financial planner is in the ideal place to help with your resolutions and make that commitment much stronger.

If you would like to have a chat about your finances please give me a call on 01347 868196.

Best wishes in 2012.

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