I was brought up to make the same earnest new year resolution every December 31. “I will be a good boy,” I would faithfully promise my parents, only to pick on my brothers within a couple of hours.
Year after year it went on, with the same predictable result. The problem, you might think, was with me and my behaviour. Undoubtedly so.
But there was also an issue with the resolution itself. It was too vague. It set no time limits. And it was too easily broken, since even a minor infringement (and there were many) undermined the whole pledge.
I find it worth remembering this distant precedent when I put together my new year financial resolutions. Too often in the past, I’ve been too general with my pledges. Wishy-washy, even. So, for 2022 I’m going to be as specific as I can, while leaving a little wriggle room to allow for the fact that next year promises to be unpredictable. Like any other year.
Let’s start with credit cards, the plastic lures that take so many of us off the straight and narrow. I promise to pay these off on time every month. Not good enough. “On time” is too flexible. I simply forget to pay and end up having to phone Barclaycard on the day after the deadline begging for mercy. Not only is this a waste of time — you’re on the phone for 10 minutes before you speak to a human being — but it’s totally undignified. Especially when you have the money to clear the bill and your only failing is a lack of self-discipline.
I could, I suppose, set up a direct debit so the card is cleared automatically. But I don’t like the feeling that the money just washes out of my account without me checking where it’s going. So I will instead rely on a strict timetable. For 2022, it’s “pay my credit card bill by the tenth of the month”.
Moving on to tax returns. I have done well in recent years in avoiding the last-minute rush to meet HM Revenue & Customs’ January 31 deadline — and filed a month in advance. But this brings its own headaches, because my self-imposed date coincides with the Christmas/new year holidays. And who wants to be reminded of tax when you’re trying to have a good time? Even with the pandemic, there are more pleasant things to do. So for 2022, I’m filing by November 30.
Household bills are a many-headed monster. They mostly get paid automatically via direct debits. In normal circumstances, that’s great. You don’t even have to think about them. But, with inflation rising and energy prices soaring, it’s high time for a review. And a plan. My fixed-rate contract for electricity and gas expired in November. Like millions of other householders I am now on a standard variable tariff. It’s about 30 per cent up on the fixed-rate deal and certain to increase by at least another 30 per cent in April, when the regulator resets the energy price cap.
I need to shop around, even if the alternatives may be little better than my current contract. And I need to do this soon, by February 28, to set a date. I also need to look at insulation, double glazing and the rest, but that’s a whole other story, fortunately beyond the scope of new year financial resolutions.
However, what I can promise under the resolutions rubric is to do much better in managing builders. How many times have I told myself that I have to get three quotes for a serious piece of work? And how many times have I gone with one? The reason, of course, is that getting builders to quote is almost as hard as getting them to start work once the quote has been accepted. But this is to play into their hands. From now on, it’s three quotes. Well, at least two. Wriggle room.
With inflation accelerating, a job delayed will inevitably become a job that’s more expensive. So, another piece of the resolution agenda is to decide in advance what work will be done in 2022. Not in April, when the sun starts shining and the sight of other people’s scaffolding comes as a belated reminder of my own leaky guttering, but now, while it’s still cold and dark. January 31 seems a good deadline since rival householders might still be busy filing their tax returns.
And what about bringing forward other purchases if prices are likely to rise? I could pat myself on the back for buying a second-hand car in 2020 just before prices jumped 30 per cent because of the switch out of public transport. But it would not be honest — it was my wife who pushed me into this prescient decision.
This year, there’s the ailing dishwasher to consider. I haven’t heard of a shortage, but who knows? It needs microchips and the world is running out of those. And it probably comes from China so there’s a very long supply chain from the factory to me. Best set a purchase deadline — March 31.
Next, deal with Isas on time. I always wait until the last days of the tax year to decide how much of my little pile I will put into these tax-saving accounts before the April 5 deadline. I know that far too many people do the same, if only because we publish the FT Money Isa special at the end of the tax year, precisely when the financial firms supplying the advertisements 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 normally do, which is to use my high street bank’s Isa products because it’s the easiest option. February 28 for Isas it is.
Then there is the portfolio review. With inflation rising, the real cost of leaving money in the bank account is going up rapidly. The minimal interest rate increases creeping into the market will do almost nothing to offset the 3 percentage point jump in inflation rates that has already come in the past 12 months, not to mention any further rises. The faster I look at switching more money out of deposit accounts and into investment funds the better.
If I am rebalancing, it makes sense first to look at how current investments are doing. A UK smaller companies fund performed quite well last year but has it actually beaten the FTSE 250 index? I don’t know. My Asian fund is down. But has it done worse than the market? No idea.
In past years, the review has usually been put off in the hope that the bad bits of the portfolio will have recovered while the good will have gone onward and upwards. So the review has rarely happened. This year it will be done by January 31.
Finally, this is going to be the year of the lifetime financial plan. I have promised myself in each of the past three years that I would speak to a financial adviser for the first time in my life and make a savings/investments/pension plan. It’s never too late. But it needs a deadline. My birthday seems appropriate for such a life-changing event: late May. Cards and champagne welcome.
Stefan Wagstyl is editor of FT Money and FT Wealth. Email:stefan.wagstyl@ft.com. Twitter:@stefanwagstyl
Without deadlines, what are resolutions worth?
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