I was raised to make the same serious New Years resolution every December 31st. “I’ll be a good boy,” I faithfully promised my parents, only to take it out on my brothers in a matter of hours.
Year after year it has continued, with the same predictable result. The problem, you might think, was with me and my behavior. Without a doubt.
But there was also a problem with the resolution itself. It was too vague. He didn’t set any time limit. And it was too easily broken, because even a minor infraction (and there was a lot) undermined the whole oath.
I find it worth remembering this distant precedent when preparing my financial resolutions for the New Year. Too often in the past, I have been too general with my commitments. Wishy-washy, even. So, for 2022, I’m going to be as specific as possible, while leaving a little leeway to take into account that next year promises to be unpredictable. Like any other year.
Let’s start with credit cards, the plastic lures that lead so many of us out of the way. I promise to pay them on time every month. Not good enough. “On time” is too flexible. I just forget to pay and end up calling Barclaycard the day after the deadline to ask for mercy. Not only is it a waste of time – you’re on the phone for 10 minutes before speaking to a human – but it’s totally outrageous. Especially when you have the money to pay the bill and your only failure is a lack of self-discipline.
I could, I guess, set up a direct debit to have the card automatically wiped. But I don’t like the feeling that the money is coming out of my account without me checking where it is going. So I’m going to rely on a strict schedule instead. For 2022, it’s “pay my credit card bill before the tenth of the month”.
Let’s move on to tax returns. I’ve done well for the past few years by avoiding the last minute rush to meet HM Revenue & Customs’ Jan 31st deadline – and filed a month in advance. But it brings its own headaches, as my self-imposed date coincides with the Christmas / New Years holidays. And who wants to remember the tax when trying to have a good time? Even with the pandemic, there are more enjoyable things to do. So for 2022, I file before November 30.
Household bills are a monster with many heads. They are mostly paid automatically through direct debits. Under normal circumstances this is great. You don’t even have to think about them. But, with rising inflation and skyrocketing energy prices, it’s high time to take stock. And a plan. My flat-rate electricity and gas contract expired in November. Like millions of other households, I am now on a standard variable rate. That’s about 30% more than the fixed rate deal and it is sure to rise by at least another 30% in April, when the regulator resets the energy price cap.
I need to shop around, although the alternatives might not be much better than my current contract. And I have to do it soon, by February 28, to set a date. I also need to look at the insulation, the double glazing and the like, but that’s a whole different story, thankfully outside of the New Year’s financial resolutions.
However, what I can promise under the heading resolutions is to do a lot better in the management of builders. How many times have I told myself that I need to get three quotes for serious work? And how many times have I gone with one? The reason, of course, is that getting builders to quote is almost as difficult as getting them to start work after the quote is accepted. But that’s playing the game with their hands. Now there are three quotes. Well, at least two. Quiver room.
With the acceleration of inflation, delayed work will inevitably become more expensive work. So another part of the resolution program is deciding in advance what work will be done in 2022. Not in April, when the sun starts to shine and the sight of other people’s scaffolding comes as a late reminder of my own. leaky gutter, but now while it’s still cold and dark. Jan. 31 seems like a good deadline as rival households could still be busy filing their income tax returns.
And what about anticipating further purchases if prices are likely to rise? I could congratulate myself on buying a used car in 2020 just before prices went up by 30% due to the elimination of public transport. But that wouldn’t be fair – it was my wife who pushed me to make this premonitory decision.
This year there’s the struggling dishwasher to consider. I haven’t heard of a shortage, but who knows? He needs microchips and the world is missing them. And it’s probably from China so there’s a really long supply chain from the factory to me. Better to set a deadline to buy – March 31st.
Then deal with Isas on time. I’m still waiting until the last days of the tax year to decide how much of my little pile I’ll put in those tax savings accounts by the April 5th deadline. I know far too many people are doing the same, if only because we release the FT Money Isa special at the end of the fiscal year, precisely when the financial companies providing the ads want it to come out. It would be so much better to make these decisions without the time pressure.
And I should consider alternatives to what I usually do, which is to use Isa products from my big bank, as that is the simpler option. It is February 28 for Isas.
Then there is the portfolio review. With the increase in inflation, the real cost of leaving money in a bank account increases rapidly. The minimal interest rate hikes creeping into the market will do next to nothing to offset the 3 percentage point rise in inflation rates that has already occurred over the past 12 months, let alone the news. increases. The faster I plan to move more money from deposit accounts to investment funds, the better.
If I rebalance, it makes sense to look first at how current investments are doing. A UK small business fund did pretty well last year, but did it really beat the FTSE 250 index? I do not know. My Asian fund is down. But did he do worse than the market? No idea.
In recent years, the review has generally been postponed in the hope that the bad parts of the portfolio will have recovered while the good parts have progressed and increased. The review therefore rarely took place. This year, it will be done before January 31st.
Finally, this will be the year of the Lifetime Financial Plan. In each of the past three years, I have vowed to myself that I will speak to a financial advisor for the first time in my life and create a savings / investment / retirement plan. It’s never too late. But there needs to be a delay. My birthday seems appropriate for a life changing event: the end of May. Welcome cards and champagne.