Why you should tell your clients to drop their predictable New Year's resolutions

by on 18·01·2022

On the first morning of 2022, I wrapped up warm and took a walk around my local park.

After a while, I took a well-earned rest on a bench near a couple of women having a good old chinwag. I couldn’t help but overhear what they were talking about:

“So, what New Year’s resolutions have you made then?”

“Oh, I don’t know where to begin, there are so many: lose weight, get fit, spend more quality time with the family…”

blah blah blah

I’d zoned out at that point. I stood up from the bench and proceeded to make my way home. The subject matter may have been boring and predictable, but it did get me thinking.

I’m not saying fitness and family-time aren’t important but, really, is that the best they could come up with?

According to Country Living magazine, (my go-to publication after The Financial Times, honest), losing weight, eating healthier and getting fit are the top 3 New Year’s resolutions for 2022.

As I read down the list, I was surprised to see a relatively new entry coming in at number 5 – taking care of my mental health, closely followed by number 6 – sorting out my finances.

A lot of your clients might already be slipping on their ‘traditional’ New Year’s resolutions, so maybe this is a great opportunity to get in touch with them and give them a renewed focus.

Returning to the hit parade of new year’s resolutions, let’s switch it around a bit: let’s put sorting out my finances as my number 1 New Year’s resolution, followed by taking care of my mental health as number 2. And why would that be? That’s easy, because sorting out my New Year’s resolution number 1 will go a fair way to sorting out my New Year’s resolution number 2.  Losing weight, eating healthier, getting fit, spending time with the family are all lifestyle changes that flow from getting the foundations straight.

You can send a newsletter to clients with some simple ways of “sorting out your finances”.

This might be a useful example of the sort of thing you could send them.

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New Year’s resolutions are notoriously hard to maintain.

There are countless theories out there about how long it takes to form a habit, but it seems to be between 21 and 66 days.

If you are already slipping, maybe it is a good time to double down.  If you commit to your New Year’s resolution now, by the end of March 2022 you’ll be doing it in your sleep.

We believe you can help yourself with some simple financial New Year’s resolutions.

But where to begin? Warren Buffett famously said, “Do not save what is left after spending, but spend what is left after saving” and whilst these are wise words, if you’re anything like me, you need to read it three or four times till the message starts to filter through.

Let’s start simple: spend less, save more.

Do you really need that Costa lemon and poppy seed muffin to go with your daily skinny latte?

Saves you £2.25 and 532 calories per day (and you’d even be including a bit of the eating healthier New Year’s resolution! You’re welcome).

But seriously, £2.25 per day is £15.75 per week, £68.25 per month or £819.00 per year. Who wouldn’t say no to an £819 pay out at the end of 2022?

Here’s another idea - what about your annual council tax “holiday”?

Council tax is payable over 10 months, so we get two “free” months where we don’t pay.

According to the Ministry of Housing, Communities and Local Government, the average Band D council tax in England for 2021/22 is £1,898, so that means not having to pay £189.80 in council tax for February and March each year.

Be honest, do you feel the benefit of this, or does it go by unnoticed? In these two months, you could perhaps double up on the muffin money and give your savings a boost.

So these are two of my ideas to inspire you to spend less, save more.

Obviously, it is not an exhaustive list but one that hopefully resonates and gets you thinking up your own savings hacks.

But here’s the pièce de résistance, the icing on the cake, the jewel in the crown: make your money work harder for you by investing it.

Let’s stick with our keeping it simple theme, set up a stocks and shares ISA (individual savings account) and pay in your weekly savings. It’s a fabulous way to start your investment journey, plus, you can do it all online and from the comfort of your armchair, or rowing machine, depending on which New Year’s resolutions you are working on.

ISAs are easy to manage, they offer flexibility in that you control how much you want to pay in and when, with an overall cap on the maximum that can be paid in one year which is currently £20,000. And the best thing about an ISA is that you don’t pay tax on any growth, interest or returns, so there is nothing to report on your tax return.

There are plenty of ISA providers out there who can invest your money into a portfolio appropriate for your risk appetite aiming for growth in excess of the rate of inflation. You will be saving up a nice pot of money for a rainy day, new car, wedding, whatever, whilst also inflation-proofing your money against the future.

Mental health and money are closely linked. Money worries are a common source of stress and poor money management and can have an adverse impact on mental health. By saving little amounts on a regular basis you will soon see the benefit as your savings pot grows. You could call it your mental safety net, the peace of mind you get from knowing that you have a pot of money to hand should it ever be required.

Why not push “sorting out your finances” to the number 1 spot in your New Year’s resolution list and spend less, save more and remember, in the words of Aristotle, “Money is a guarantee that we may have what we want in the future. Though we need nothing at the moment it ensures the possibility of satisfying a new desire when it arises.”

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Being a great financial adviser doesn’t all have to be high end, technical stuff generating huge fees.  Sometimes, the little ‘helpful hints’ can secure your relationships just as much.

Communication is key.