“New year, new me”: It’s a phrase that’s often heard when January comes along, but an extreme New Year’s Resolution isn’t always realistic. At the start of a new year, it seems like anything is possible. However, years of failed resolutions can leave you feeling sceptical about setting new ones.
So, is there any point in making new year’s resolutions at all? Of course, there is! The key to setting goals for a brand-new year and sticking to them is making sure that they are achievable.
If your goal this year is to boost your finances, there is an endless list of changes you could make, that could have a big impact. The trap many people fall into is overcomplicating things. But building new money habits can start small. In fact, the more sustainable and achievable money resolutions are, the more likely you are to stick to a renewed, healthier attitude towards your finances.
There are so many new year saving tips out there, as saving is such a popular new year’s resolution. Educating yourself on money matters gives you a solid foundation to build on. So, whether you’re considering a new year savings challenge, exploring new ways to save or taking your first steps into investing, remember that expanding your knowledge is your key to long-term financial success. And the start of a new year is a great time to get started with that.
Reasons to make saving and investing your New Year’s Resolution
Deciding on your New Year’s Resolution isn’t always easy. Whether you focus on one resolution or a few, it’s important to think carefully about what is most important to you. Picture the happiest or best version of yourself and then consider what you’ll need to achieve to get there – and which financial goals you need to set.
Having a long-term vision can help you to choose a meaningful resolution and keep you motivated. The great thing about choosing saving or investing as a new year’s resolution is that it can help you to make your dreams for the future a reality. In fact, it has a long list of other benefits, too – we’ve listed the top five below.
1. You can set your own pace
Saving for your future is an ongoing task, which means that you can opt to do it in a way and at a pace that suits you. For instance, you can tailor how much you save based on your circumstances; if they change, you can increase or decrease the amount you choose to save throughout the year.
The same applies to investing: whilst this involves risk, you can start small, with regular monthly contributions, and gradually increase them as your confidence grows. Whether it’s an Investment ISA or another plan, flexibility is key.
2. It’s measurable
It can be easy to let your New Year’s Resolution slip if you can’t see progress.. Saving regularly can help your money grow over time, but your savings may lose value in real terms if the interest rate is lower than inflation.
Because saving is measurable, you can monitor how you’re getting on. If it looks like you’re not going to hit your target savings amount, you can actively make changes for the better. Or if you feel like you’re way ahead, you could temporarily reduce how much you save to give yourself some extra spends or raise your target.
3. A stepping-stone to your long-term goals
What is it you’re saving for? Buying a new home? Financial security for your family? Planning your dream wedding? A stable emergency fund for rainy days? Whatever your goals, saving will help you on your way to achieving them. Starting to save and continuing to do so will mean that you’ll be prepared for anything.
Once you’ve established strong saving habits, investing can become a powerful next step toward achieving those bigger dreams. Whether you’re planning for retirement, your children’s future, or financial independence, investing can help your money grow faster over the long term. However, it is important to remember the risks of investing and your money can go down, as well as up.
Other resolutions can make it easier
If you’re making additional New Year’s Resolutions, think about how they can help you to save money. For example, a common resolution is to eat healthier; eating out less often and ordering fewer takeaways means extra pennies in your savings pot and more capital to invest.
Other common resolutions that could cut your spending include quitting smoking and drinking less alcohol. Work related objectives can also contribute to your savings including a new job or cycling to work.
The knock-on effect
It’s not all about the future; improving your relationship with money and working on your financial education has the potential to improve your overall wellbeing here in the present.
A commitment to regular saving requires you to assess your financial situation. Looking at your finances in detail gives you the opportunity to review them and re-think your budgeting. Therefore, starting to save can trigger a new approach to how you manage, grow, and invest your money.
Money can be a source of anxiety, so understanding where your money goes and learning how to grow it can boost your financial literacy and sense of control, supporting both short- and long-term wellbeing.
Investing: the next step to building your future
Once you’re committed to saving for your future, you may wish to explore your investing options, too. While saving can offer you security for your savings, alongside some steady but limited growth, investing can often help your money work even harder.
Investing often has the potential to outgrow cash savings over the long-term, giving you the opportunity to grow your nest egg further. However, it’s worth noting that investing carries more risk. So, if you’re considering investing as an option to boost your future wealth, make sure you find an investment with a risk level you are comfortable with.
What are you saving and investing for? Investing can help with long-term goals such as:
| Goal | Why Investing Can Help |
| Planning for a more secure and comfortable retirement | The potential to outpace inflation over time, means your money could go even further in the future and keep up with rising living costs. |
| Your child’s / children’s future | Build a fund for higher education or other milestone moments. More growth potential could give them more to spend when they’re ready to step into adulthood. |
| Financial independence | You could grow wealth over the years, and build a nest egg to put towards the cost of being financially independent. |
Do you think that investing is too complicated or that you don’t have the time? Everyone starts somewhere and everyone has different lifestyles, circumstances and goals – so, investing isn’t one size fits all.
It’s true that DIY investing can be quite hands-on and can be expensive, but that’s not the only option available to aspiring investors. A fully managed Investment ISA or Stocks and Shares ISA can take the hassle out of investing and cater to a range of budgets, too. You don’t need thousands to spare to get started. Contributing small, regular amounts can add up over time.
Different investment providers and platforms will offer you different benefits. For example, at Shepherds Friendly, our Investment ISA plan aims for long-term, sustainable growth and to shield your money from sharp ups and downs in the markets. That means, for this plan, we do the hard work for you, and you have more time to focus on the important things in life, rather than juggling a portfolio.
In our Beginner’s Guide to Investing, we talk about the importance of choosing the right type of investment for you. So, if you’re just starting out, make sure you do plenty of research to ensure you choose an investment that works for your goals, budget and risk tolerance, as well as the amount of time you can commit to managing your investments.
If you’ve already built some confidence from saving, or you’re keen to grow your money over the long-term, investing could be the next natural step. The right investment can give your money more chance to grow, while still aligning with your goals for the future.
How to get started with investing
If investing is on your New Year’s resolutions list, getting started can be the tricky part. Again, keeping things simple could help you to gradually build momentum. A slow and steady start is better than no start at all!
Having a solid plan in place before you start your investing journey is a good place to start. You can find some tips on the first steps you can take below. However, the best motivation to get started is to remind yourself of the end goal. Whether you’re investing for your dream home, the trip of a lifetime, your child’s future or to retire early, keeping that long-term goal in mind will be the best motivation to start and continue investing.
Review your budget
Before you start investing, it’s important to understand how much you can realistically expect to invest. This will depend on your income, your outgoings and how much money you may need to have available as an emergency buffer.
Take a close look at your finances and review your budget to find out how much you can invest, whether that’s a lump sum, regular monthly payments or both.
Build a foundation
Once you know how much you can invest, it’s time to consider whether or not you need to build yourself a financial foundation. Before you start investing any money, it’s recommended that you make sure you have an emergency fund for rainy days. This is typically three to six months’ of expenses. This isn’t an essential step, but it could be helpful if you ever find yourself faced with financial difficulties or unexpected bills. An emergency fund will allow you to keep life moving without having to postpone your investing goals.
Learn the basics
The next step is all about education. Get to grips with the basics of investing. From the different types of investment available and risk levels to diversification and time horizons, there’s a lot to learn. And by making sure you have all of the basic knowledge you need, you can make informed choices when investing. Plus, you’ll feel more confident, too.
Start small
Many habits that stick, start small. If you commit to investing an amount of money that isn’t sustainable, or choose very hands-on, time-consuming investments when you have a busy life, will that work for you in the long-term? And will you feel motivated to start or carry on investing if your end goal feels completely unrealistic and unachievable? It’s unlikely (and understandable).
Give yourself the best chance of investing success by building habits you can build on over time. Starting small could look like choosing to invest regular, manageable contributions rather than large one-off lump sums. Or it could look like breaking your investment journey down into stages that you can tackle one at a time.
Make it fun
While investing is a relatively serious topic, that doesn’t mean you can’t have some fun along the way. In fact, adding some novelty, rewards or challenge can help to keep you motivated and make the most of your investing journey.
Money saving challenges can give your budget a boost and maybe free up some more money to invest. For example, the 1p challenge, a no-spend challenge or a 52-week challenge. Other ways to make investing fun include little rewards when you reach milestones and ‘gamifying’ your approach.
How to stick to it
Planning to make a radical change in a short period of time could put you on an instant path to failure. A Forbes Health Survey found that the average New Year’s Resolution only lasts less than four months. Therefore, in order to improve your chances of making your New Year’s Resolution a success, set yourself smaller and achievable targets that will help you to reach a bigger goal over time.
This means that you shouldn’t expect to become a millionaire over 12 months by skipping your daily coffee. Set yourself an amount you would like to save or invest by the end of the year and create a list of steps to help you get there. Stay on track by regularly reviewing your progress (every two months, for example) and making any necessary adjustments to your plan.
Remember, saving takes commitment, self-discipline and patience – but it will be worth it in the end.
When you take out an investment product your capital is at risk and you may get back less than you put in. No advice has been given by Shepherds Friendly and if you are in any doubt as to whether a investment plan is suited to your needs, then you should contact a financial adviser. There may be a charge for financial advice and the cost should be confirmed to you beforehand.
