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5 money resolutions and how to get started

About 8 minutes to read

It’s fair to say that 2020 was a year of financial ups and downs.

Many of us saved more – with 28% of British households building up additional savings, according to the Bank of England. This was highest amongst high-earning households (44%) and retirees (36%). Similar data also showed that around £12 billion in consumer debt was repaid in the second quarter of 2020. On the other hand, by the end of the year the Legatum Institute was reporting that around 23% of the UK population is now living in poverty – with millions over-indebted and holding less than £100 in savings. 

The fact is that between furlough schemes, reduced salaries, job uncertainty and sometimes loss of work, last year has been rocky for our sense of financial security. And whilst some of us were able to use lockdown to take online courses or focus on our side hustles, we’ve also entered economic recession and many will be worrying about what the future might entail. 

No wonder then that so many of us are setting money resolutions to kickstart 2021. Having spoken to many people now about what those goals look like, it’s clear there are some trends in our thinking – from lockdown slowing down our lives so we can save more, to choosing to shop local and small or just less. Here, we’ve rounded up some of the most common resolutions and how to get started on achieving them – so if you’re looking for a little inspiration on starting a new financial habit, then this one’s for you. 

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1. Save with purpose 

It’s no surprise that many of us saved money through the pandemic. We’ve not been out and about. And for many, the most exciting thing since March 2020 was going on a scenic walk with up to six people. It’s changed our savings habits, with research showing that over 75% of us have reconsidered our saving habits since the start of the first lockdown. Moreover, according to a report from the Centre for Business and Economic research in December, households are estimated to have saved around 19% of their disposable income in 2020. This doubles the savings ratio from 2019 and equates to about £7,100 per household – or £197 billion across the UK.  

“Lockdown really showed me that I can save,” says Vicky, a surveyor from London. “I think beforehand I always thought I wasn’t earning enough to save money or start investing. Over the course of 2020, I realised that it wasn’t really my salary that was the issue but my spending habits. I have a very active social life but it’s always been very much going out for dinner, for drinks, for dates and so it all added up. Even in the summer last year, I was able to save and actually managed to buy a new car after mine broke down. Now I want to really build a savings habit that I can maintain and think about investing too. It’s less about saving for a holiday now and more about saving for my future.” 

Saving is one of the most powerful things we can do – especially if we do it in a conscious and proactive way. For instance, building up our emergency fund gives us a financial security blanket alleviating our day-to-day stress; saving towards a dream holiday gives us something to look forward to and can bolster our mental health; and it can also help us to press pause on impulse purchases as we choose to save towards something rather than spending straight away. 

If saving more is one of your financial resolutions, the trick is often to be specific with it. This includes the amount you want to save, what your saving goal is, and what you hope to use your savings for. Being specific helps you to stay on track and monitor your progress – as well as ensuring you can see exactly what you’re saving and when. Another thing that may help is to keep your savings separate from your everyday spending money – having a savings account, saving pot, or even a second current account that you transfer your savings to can be a good first step to ensuring you save more and dip in less. Some banking apps also have features –  like ikigai’s Goals – that can help you carefully track and build your savings. 

2. Spending on what matters  

When we decide to cut back on our spending, it’s often framed as a need to spend less and live within our means. We create budgets and try to only buy the things we need – or at least the things that fit within our spending plan. However, the last year has meant that many of us have been reflecting not just on the amount we spend but how we spend – and this is translating into our financial resolutions. 

“I spent so much on Amazon last year, it’s not good,” says Will, a 36-year-old lawyer living in Putney. “It’s the convenience of having things delivered fast and efficiently when you’re not able to go out. This year I want to change that and shop more locally. There’s a market near where I live that I want to check out and lots of small cafes that are still open. It’ll be good to have less packaging to throw out every week and I think I’ll spend less that way too.” 

According to YouGov, 64% of people in the UK want to support local businesses and buy local products in the wake of the pandemic. A further 39% of shoppers said they hope to adopt a more environmentally friendly mindset when out shopping as a result of Covid-19. These are great goals and if you want to try spending more on what matters, then the first thing to do is to take the time to think about your values and the ways you can align them with your spending – this might mean changing where you shop or what you buy. Reading your local paper can also help you identify small, local businesses, whilst online forums might offer insight on community initiatives like food sharing or charitable organisations. You can read more about aligning your values with your finances in our article on mindful money

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3. Investing more proactively 

Investing is another one that many are looking at as something they want to explore further in 2021, setting resolutions to learn and invest more. 

“I want to see my money work harder for me,” adds Vicky. “Which is why me and so many of my friends are looking at our options. My brother uses a roboadvisor and recently told me how much he’d made in 2020. I have savings now so I want to see if I can make my money do that too.” 

It’s a good goal. Plus, the current lockdown certainly seems like a good time to be looking at the investment landscape and what’s right for you as an investor. After all, as we discussed in September, a fifth of investors in the UK (20%) found more time to optimise their investments in 2020, and around 11% made additional investments they weren’t previously planning to – with younger investors (under 34) being the most likely to have proactively assessed and made changes to their portfolios. There’s also a wealth of information out there from advisors and writers, economists and investors, all assessing what opportunities 2021 might have to offer. 

But for newcomers, not knowing where to start with investing seems to be a common concern. As Cashel from Bambridge, explains, “I’ve managed to save a bit over the last year or so and want to maximise that by investing, though don’t know the first thing about going about it.” 

Investing can seem incredibly complicated but there are lots of brilliant resources online that can help you to feel more informed as well as some great social media accounts and podcasts too. If you’re more of a reader, then media like the Financial Times, This is Money, and Which have great insights on the investing landscape and can get you started or bolster your knowledge and confidence. Of course, services like ikigai are also there to help – so no matter your experience or confidence, there’s an opportunity to speak to someone and learn more before you make any financial decisions. 

4. Getting organised

Bex, who turned 31 in December, says organising her finances is top of her to-do-list for 2021, including making a will and sorting out things like her insurance and pension.

“I’ve been putting off a lot of stuff for a long time,” she says. “I’m a homeowner but I don’t have life insurance or a will. I’ve been paying like three percent into my pension when I know I should be trying to pay more now that I can. I’m at an age where my boyfriend and I might want to think about having kids in the next few years, but we’ve always been quite lax about saving, you know, we’re comfortable and have money for emergencies but the pandemic showed that I probably need to get serious now, at least more than before. So I’ve decided being more organised is my main money resolution. I think it’ll help me feel more in control and positive about my finances too.” 

Organising your money might sound like lots of admin, but it can also help you stay on top of things – hopefully cutting down the chance of accruing late fees on a missed bill or accidentally paying for a subscription you no longer use. It can also take lots of different forms – from creating a monthly budget or reviewing your credit score, to writing out a checklist for your bills, consolidating your pension pots or organising a will. Other considerations might be reviewing your banking and finance options, making sure your apps are working for you, that you’re getting the best value on your savings, and that you’re able to easily track your investments – this might mean setting up a ‘financial admin day’ once a month or every few weeks. 

Organising your personal finances can be transformational. It might not be riveting work, but it’ll ensure you know exactly what you’re working with and how best to plan towards your goals – putting you firmly in control of your money. 

5. Earning your worth  

After a year defined by job uncertainty, salary cuts, foregone bonuses and hiring freezes, it’s no wonder that so many people want to find a way to earn more in 2021. For some this might be achieving a promotion or pay rise. For others this includes making more of a side hustle or building a more portfolio career. 

“For me my focus this year is being paid what I’m worth and to make up for last year,” says Aoife, a 30-year-old consultant whose salary was cut to 80% during the pandemic. “I obviously want to stay on top of things like my spending and I’d like to look at some alternative investment opportunities too, my focus is really on my salary. I’m going for a promotion, that’s a main goal, but even if I don’t get that I want a pay rise because I’ve been working more, taking on more responsibility, and am part of a leaner team now.” 

On the other hand, for people like Dan, a marketing manager launching a podcast later in 2021, his goal is to get to a point where he can add sponsors and monetise. “I’d like to have more strings to my bow. I’ve always wanted to run a podcast and I think it would be good to learn more about getting sponsors and stuff too.” 

Knowing your worth and actively pursuing a promotion, pay rise, or opportunity to earn more can be challenging. But in almost every instance, the art of negotiation is central to achieving your goal. Preparation is key to negotiation – so before you push ahead, make sure you have a list of reasons and evidence for why you deserve that raise or that job or that freelancer fee. Have the numbers to hand so you can easily refer back to successes and metrics. Write down any positive feedback or praise that you’ve received to back yourself.  Consider your skill level and seniority, your experience and ambitions too – these shouldn’t limit you but can define a starting point. 

Also go in knowing what you want. If it’s a new job, look at how you can make yourself more attractive to the jobs market. If it’s a pay rise, ask yourself if you’d accept non-monetary benefits like extra holiday or a car allowance. If it’s an increase on your day rate or a new contract, then make sure you know what you’re offering for the full fee and what you can do if a client has a reduced budget. If you’re in doubt, speak to friends who work in the same sector or a mentor about what you’re aiming for – see if they can offer advice. The point is to hold onto what you think your worth, prepare and use evidence to back yourself. And if you don’t get what you want, then perhaps it’s time to consider what other options are out there and how else you might achieve your goal. 

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We built ikigai specifically for those who want to bring their lifestyle to the next level, by taking better care of their finances.

ikigai beautifully combines wealth management and everyday banking in one single app. And by doing so, it creates a whole new world of opportunities.

Visit https://ikigai.money to find out more.

Maurizio & Edgar, Co-Founders, ikigai

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Last modified: 15 January 2021
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