Improve your Financial Wellbeing in 2022

COVID-19 continues to have an impact on the UK economy and our personal finances. In a rapidly changing world, there are things you can do now to regain a sense of control and improve your financial wellbeing:

• Create a personal financial plan for 2022
• Address your financial uncertainties

1.    Create a financial plan

Know your incomings and outgoings: This is an essential first step in any financial planning. You need to be honest about your regular outgoings and determine what you actually spend instead of what you’d like to spend. Take some time out to know what your outgoings are and review your bank statements for the past year – what did you typically spend money on? Just the act of pulling this information together can help you identify ways of reducing costs and getting better value for money on essentials, such as utilities and phone contracts.

MoneyHelper (previously The Money Advice Service) has an online budget planner that guides you through your expenditure and provides you with an instant spending breakdown to print or download. It also offers sound advice about where to save money. 

Plan for large, known expenses: What does 2022 hold for you? Are you planning to go on Hajj in July? Or attend a family wedding? Can you anticipate how much you’ll need for Eid? For celebrations? Estimate a realistic figure so you can budget for these large outgoings now. 

Al Rayan Bank has a range of savings accounts that let you profit from your savings while remaining true to Islamic teachings. We undertake ethical, Sharia compliant activities with the intention of generating profit, which we then share with you. You can find out more here. 

Plan for unforeseen expenses: Unexpected costs can send even the best-laid financial plans awry. For example, an emergency household repair bill, your car failing its MOT or a large utility bill. Planning ahead will give you a buffer to protect against financial difficulties arising from unexpected costs. A good rule of thumb is to have three months’ essential outgoings available in an instant access savings account for emergencies. You can find out more information about Al Rayan Bank’s Instant Access savings accounts here. 

Maximise your profit: The financial plan you’ve put together for 2022 will help you determine how much you could save each month; you’ll be surprised how quickly your savings add up. 

Before the fiscal year ends on 5 April 2022 try to take advantage of your Individual Savings Account (ISA) allowance, which is set at £20,000. However much or little you can put away will earn you tax free profit and the 2021/2022 allowance will start again on 6 April. You can find out more about Al Rayan Bank’s range of Sharia compliant ISAs here. 

If you can put your money away for a period without needing to access it, then a Fixed Term Deposit account could give you better rates of profit. You can find out more about Fixed Term Deposit accounts here. 

2.    Address your financial uncertainties

Financial uncertainty can have a negative impact on your financial wellbeing. It’s far better to address your concerns head on, as there are organisations and people that can help. For example, if the following are affecting your financial wellbeing, you can find out further information on where you can get help below:

• Not being sure what benefits you may be entitled to
• Confusion or worry about your retirement options
• Concerns about your health and how this may impact your ability to work

Benefits

If you are an employee, you are entitled to a host of workplace benefits. Do you know what they are? If not, speak to HR and ask them if you can go and have a chat about what is available. Following that session, they will be able to provide you with more information and guidance.

Benefits and tax credits are available for those with or without a job. To find out what you’re entitled to, complete this 10-minute online check.

Are you, or a relative of an older person? Each year up to £3.5bn of Pension Credit and Housing Benefit goes unclaimed by older people. Some benefits, like the Winter Fuel Payment, are entirely dependent on age - and not at all related to income. Use this straightforward benefits calculator from Age UK to discover more.  

Retirement options

Workplace pensions: If you’re over 50, PensionWise is a free government service that can help you make sense of the different ways you can access the money in your defined contribution (private or workplace) pension. You can speak to an adviser for an hour, who will give you clarity on all the options available to you. Following the call you will be sent a summary of what was discussed.

State pension: For an estimate of your State Pension, call the Future Pension Centre on 0800 731 0175 or use the online service for a State Pension statement.

You will be able to find out your state pension forecast at retirement, based on your national insurance record up to 5 April 2021. It will also tell you how many more years you have to pay in order to receive the full state pension. 

In addition to PensionWise, MoneyHelper is another government sponsored financial advice organisation that provides free and impartial guidance on your money and pensions. It is an amalgamation of the Money Advice Service and the Pensions Advice Service. More information can be found here.