Hello, and welcome back to 2022. Where on earth has all this time gone and how are we flying through January?! Yesterday was blue Monday – and the prospect for our finances can weigh heavy with uncertainty as part of entering the new year – but here are some things we might want to consider or might expect to see.

In the UK, there has been a lot to grapple with over the last two years, with Autumn 2021 seeing a budget finally being presented. It represented a challenging fiscal position, as was expected, one in which the Treasury is seeking desperately to recoup resources and balance the debts again, that have increased further as a response to the pandemic and departure from the EU.

But last year’s budget is not the only thing we will see impact our 2022 personal finances, with previous years announcements and wider external factors at play (including to-be-understood variants and international politics), these are some key things to keep an eye on.

1. Interest rates may finally rise
   Savers will rejoice at this – finally, some return on cash in the bank, but mortgage holders beware. If you’re able to, start looking at your rates and options available to you. Whilst its not a dead cert, if rates increase you could easily face a few extra hundred pounds in bills – and its the speculation that will cause fluctuation.
   
2. Prices continue to rise, and in particular, energy prices will continue to be rocked
   Many households are facing a rumoured increase, taking bills up to as much as £2,000 per annum. The energy price cap has had to be increased to account for the increased demand and limited supply replenishment to match this, with many Energy firms being unable to pay those high wholesale prices and provide customers, ultimately going bust. Consumers have then had to switch, generating greater pressure on the contuining providers as well as increasing bills for households, without relief. Although this is not the only increase, it makes the choice between being warm or being fed a stark reality for so many more families, and the work of charities even harder. If you are able to help, please consider doing so.
   
3. Tax thresholds might hit you sooner
   Although the minimum living wage has gone up to take into account the increasing cost of living, in real terms we’re likely to see the tax thresholds hit sooner as wages may rise. Although the basic tax rate of 20% and higher tax rate of 40% aren’t expcted to increase, following the March 2021 announcement, personal thresholds were frozen at £12,570 until 2026. What this means is if you see a pay rise, you’re likely to pay a higher amount of tax on it, and ultimately your take home pay could be impacted.
   
4. Car and clothes prices may continue to rise – but you may still be able to do well in the second hand space
   Supply chain issue continue to affect the globe, and new cars predominantly have struggled with chip shortages (I’m no tech expert, so I’ll leave that there!). This has lead to a backlog of unfilled orders for new cars and a much greater demand of second hand cars – and lots of cancelled orders from those waiting, which could see a drop in the price of 2020/2021 cars that were formerly on order. Likewise, clothing continue to see supply chain issues, including restrictions to keep workers safe, or reduced capacity as a result of sickness leading to less outputs and higher prices. Both are also impacted by HGV driver shortages, which increase the lead times on delivery across everything from parts to the final destination at your home, again, driving up cost. Second hand clothes however, are expected in abundance at charity shops and online retailers – and aren’t imapcted in the same way as they require no production.
   
5. Commuting costs aren’t coming down
   Despite many officer workers adapting a hybrid model and returning to the office less, rail fares are set to rise in 2022, and city property prices are seeing a resurgence. Many rail networks saw a considerable drop in usage and requirement, so are no doubt increasing prices to cover some of their shortfalls. Many will hope for greater flexible ticketing options in response to the new ways of office working. Intrinsically linked, over the last 18 months, house prices have seen a huge increase, especially in areas outside of the city as people sought and have secured greater flexiblilty and less office-time, meaning they take longer commutes for rural and coastale lifestyles with bigger properties. However, the resurgence in city prices suggests one of two things – homes in those areas are less available, or afforable anymore, and perhaps the draw of city life and return to offices regains its appeal with fewer restricitions to ‘normality’.

Long story short – it is expected to be a crunchy year for us all. Whilst 2020 and 2021 have been pinch-points for so many, this is where we can expect to see the real push to some sort of economic recovery, whilst somehow balancing price volatility, unemployment and insolvency and of course, an ongoing global pandemic.

The best thing you can do with your money is, watch where it’s going – keep an eye on your bills and your income – and don’t be afraid to say ‘I can’t afford that right now.’