7 financial new year resolutions you and your clients should make for 2023

person holding a sparkler

The start of a new year is a great time to commit to making positive changes. According to Statista, in 2022 the most common new year resolutions Brits made were:

  • To exercise more
  • To eat healthier
  • To lose weight
  • To spend more time with family/friends
  • To live more economically.

Financial resolutions are often a popular choice, with many committing to take control of their finances as the new year comes around. So, here are seven financial new year resolutions you can encourage your clients to adopt for 2023.

1. Save more

Having the safety net of three to six months’ expenses in an easy access savings account is one of the cornerstones of financial planning.

It provides a useful fund that clients can access in a pinch – for example, when their car or boiler breaks down, or they face a short period out of work.

While the cost of living crisis might make have seen many clients’ expenses rise, encouraging them to formulate goals and save towards these can help them achieve their ambitions.

If they are struggling to remain motivated, thinking about what they are saving for can help. Alternatively, suggest your client sets a challenge for themselves – to save a percentage of their earnings for a year, or to save £1 in week one, £2 in week two, £3 in week three of the new year and so on. If they do this, they will have £1,378 by the end of 2023!

2. Get their financial paperwork in order

It’s often hard to find the time to complete “life admin” and so many jobs get put off until tomorrow. However, having the right documents in place could be vital if the worst happens, so make 2023 the year your clients deal with their:

  • Will – according to Canada Life, 2 in 5 Brits have not made a will. Without one, a client’s assets may not pass to their chosen beneficiaries, and so it should be something they consider as a priority. If they already have a will, is it up to date?
  • Lasting Power of Attorney (LPA) – If your client loses capacity, perhaps through illness or accident, have they appointed someone they trust to manage their affairs on their behalf? If not, they should put an LPA in place to ensure their chosen attorney(s) can make decisions about their finances and care if they can’t.
  • Expression of wish forms – Pensions aren’t typically dealt with through a will, so clients should make sure they complete an “expression of wish” form to nominate who they would like their pension benefits to go to on their death.

Dealing with this admin now will ensure the client can make positive decisions about their affairs ahead of an unexpected event.

3. Put the right protection in place

The right protection means an unexpected event doesn’t derail your clients’ plans. It provides an injection of capital when clients need it most – on ill health, a sustained period away from work, or to their family if they pass away.

Protection can help to ensure financial stability and that a client’s progress towards their long-term goals isn’t thrown off course.

4. Repay high interest debt

If clients have any high interest debt, resolving to make efforts to repay this could help them get on a strong footing.

Money Saving Expert report the example that, if a client just made the minimum repayment to pay off £3,000 in credit card debt (with no further spending on the card), it would take a staggering 28 years to clear the balance, with an interest cost of more than £4,750.

5. Shop around for insurance

Since early 2021, insurers have been required by the Financial Conduct Authority to treat all customers equally on price. So, when a client’s policy renews, the price offered should be no higher than if they were buying the same cover from the same provider as a new customer.

However, This is Money reports many anecdotal examples of where this patently isn’t the case. Consequently, it can still pay to shop around for things like car and home insurance to see if there are more competitive terms available elsewhere.

Remember that not all insurance policies are equal, so clients should check the terms and conditions carefully to ensure their insurance is as comprehensive as they would like.

6. Make the most of tax allowances before they are reduced in April 2023

In the autumn statement, the chancellor announced that two key tax allowances would reduce in the 2023/24 tax year.

Capital Gains Tax exempt amount

The Capital Gains Tax (CGT) annual exempt amount will reduce from £12,300 to £6,000 for individuals and personal representatives, and £3,000 for most trustees, from 6 April 2023.

This means that clients will only be able to make a gain of £6,000 on things like non-ISA investments, second homes, and shares before they will pay CGT.

A client disposing of an asset where they have made a gain of more than £6,000 it likely to pay more tax and so careful planning may be required.

Dividend Allowance

The tax-free allowance for dividend income (the Dividend Allowance) will reduce from £2,000 to £1,000 from 6 April 2023 and then to £500 from 6 April 2024.

Any client who receives income from dividends – perhaps through share ownership or if they own their business and draw income as dividends – may now pay more tax from April 2023.

These two allowances reduce in April 2023 and so it could pay for clients to make the most of these allowances at their higher level before the end of the 2022/23 tax year.

7. Work with an expert

Your clients work with you because they appreciate the input and expertise of a professional. Our clients tell us the same.

So, if your clients want to take control of their finances and start taking positive steps towards achieving their long-term goals, we can help.

If you have clients that would benefit from a financial review or want to make 2023 the year they get their arrangements in order, please get in touch.

Email or call 01454 416653.

Please note

The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

Note that life insurance plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

What do our clients have to say?