Jenny Holt, Managing Director of Customer Savings & Investments at Standard Life, comments: “With economic uncertainty and rising living costs set to continue in 2023 household finances remain a major concern, with as many as one in four (25%) finding their current situation difficult, while 39% are just coping. Our Retirement Voice research report also uncovered that over half (58%) of people are concerned about running out of money before the end of each month.
“In these circumstances, managing your finances can feel overwhelming and hard to control, but reviewing your options and having a plan will help ease financial anxiety. The new year is the perfect time to review your finances and household budget and take steps to improve your money situation or even become more confident about tackling money issues. Consider taking a three-pronged approach - firstly, review any debt and take steps to keep it in control, secondly, set a budget for day to day spending and thirdly, if you possibly can, consider short and longer-term saving."
Jenny Holt shares tips to help get your finances in top condition for 2023 – and beyond:
- Get support with debt – “If you’ve been concerned about debt recently, there are resources that could help you. MoneyHelper has lots of guidance on how to deal with money you owe. For example, there’s information to help you figure out which debts to tackle first, and the website can point you in the direction of professionals you could talk to for free.
- Create or review your budget – “It may seem obvious, but making a household budget can give you peace of mind that you’re able to afford your essential costs, and during tougher economic periods, this is really important. If you already have a budget, it’s worth checking to see if it’s still working for you, especially as many costs have been rising over the last few months. When you take a closer look at your current and past spending habits, you might find ways to cut costs going forward – freeing up some money to put elsewhere. There are a number of budgeting apps that can help with this by analysing your spending and allowing you to categorise what you spend, making it easier to see where you can make savings.
- Set goals – and consider ways of saving – “If your budget allows try to set some manageable savings goals for yourself. The clearer your goals, the easier it is to put a plan in place to achieve them. Even if you find that you don’t have the money to set aside right now, just taking the time to explore your options will help you better manage your finances. If you can save, first try to build up a ‘rainy day fund’ for those unexpected expenses that can tip monthly budgets over the edge, like appliance or car repairs. When considering further options for saving, it’s important to remember most easy-access saving accounts don’t keep pace with inflation so you may have to consider other savings options such as Individual Saving Accounts (ISAs), or 1-2 year saving accounts. Even assuming an interest rate of 3% the value of savings will reduce in real terms over short periods of time. However, with many economists predicting inflation will fall this year, its impact on your cash will hopefully lessen as the year progresses.
The above table is based on £10,000 of savings earning 3% interest in an easy access cash-based savings account
- Consider longer-term savings and retirement planning – “Remember that saving into a pension plan can be a good way to reach your goals. They offer tax relief on your payments, so putting money into one can cost less than you might otherwise think. If you have a workplace pension plan, your employer will normally pay into this – usually making a minimum payment of 3% of your earnings, while your personal minimum contribution is typically 5%, with some employers willing to pay in more. Some even match the employee payments up to a certain amount – meaning if you can put in more, they will too. It might be worth checking to see what’s possible, as this is a great way to give your pension savings a boost.
- Track down your pension pots – and consider bringing your pension pots together - “As you head into the new year, try to make sure ‘future you’ won’t be missing out on money that you’ve previously saved. If you’ve ever changed jobs, there’s a good chance you’ve got more than one pension pot, and it might be hard to keep tabs on them all. Some people forget all about their old pots. You may be able to track personal and workplace pension savings down using the government’s Pension Tracing Service. You might find that your old pots have increased in value over time, giving you more money to put towards your future.
“If you have multiple pension pots, you could think about bringing them together into one plan. This can have several benefits:
- You have all your pension pots in one place, so it’s easier to see if you’re on track for the retirement you want
- You can cut down on admin, as you’ll only have one provider to contact when your circumstances change
- You might find you have lower charges
- Use online tools and calculators to check and plan – “With online tools and calculators, you can check if you’re on track for the future you want, as well as decide how best to manage your money as you start the new year. There are tools in which you can input the type of lifestyle you’d like when you stop working, which then show you how much money you might need to fund it. Similarly, pension calculators can show how much you might have in your pension pot further down the line. However, don’t panic if you’re not quite where you want to be, as these tools can simply give an idea of what your savings might look like – which may help you choose how much to save into your pension plan each month. Our Retirement Voice research highlighted the power of planning - 62% of those surveyed who had done a great deal of planning felt positive about their financial situation, compared to 22% who had done no planning.”
Notes to editors:
Boxclever conducted research among 6,000 UK adults. Fieldwork was conducted 6th Sept – 16th October 2022. Data was weighted post-fieldwork to ensure the data remained nationally representative on key demographics.
About Standard Life
- Standard Life is a brand that has been trusted to look after peoples' life savings for nearly 200 years
- Today it proudly serves millions of customers who come to Standard Life directly, through advisers and through their employers' pension scheme.
- Standard Life is part of Phoenix Group, the largest long-term savings and retirement business in the UK. We're proud to be building on nearly 200 years of Standard Life heritage together
- Our products include a variety of Pensions, Bonds and Retirement options to suit people's needs, helping our customers to invest and save for their future. We're proud to offer a leading range of sustainable and responsible investment options.
- We support our customers on their journey to and through retirement with comprehensive, easy-to-understand guidance so they can invest in the right way for their needs, and plan a future they feel confident about
- The value of investments can go down as well as up and may be worth less than originally invested.