There’s no denying it – 2022 has been a tough year, not least financially. According to a recent government report, published in October, 87% of UK adults saw an increase in their cost of living from August to September 2022. 

Here’s our summary of current economic pressures and suggestions to help you get your finances fit for 2023.

We’re experiencing the biggest price hikes in 40 years, driven largely by the rising cost of food and fossil fuels. The Bank of England expects inflation to stay above 10% for a few months before starting to come down. And higher inflation means higher interest rates.

If, in light of all this, you’re considering making adjustments to your spending and exploring ways to make your money go further in 2023, don’t forget that, as a Premier customer, you have 24/7 support. And your Premier Manager can guide you on any more complex financial decisions.

You may, for example, decide to create a new spending budget for next year based on what you want to achieve with your money. If so, we think it worth making sure you still have some flex for:

• building a contingency fund
• saving any disposable income into your pension or other investment pots 
• paying down your mortgage
• helping loved ones with education costs or care home fees
• enjoying experiences such as restaurants, travel and well-being.

Think ahead to your future and what it might look like, then align your saving habits with those goals. Money in the bank now could earn you more interest than we’ve seen with cash savings for a while. Or you may want to explore investing – if you’re looking to grow your money over the long term – perhaps through an easy-to-use online platform like Royal Bank Invest.

Do keep in mind, though, that the value of investments and the income from them can fall as well as rise, and you may not recover the amount of your original investment. You should continue to hold enough cash for any short-term needs. Fees, charges and eligibility criteria apply for Royal Bank Invest.

Rising energy costs have been a huge concern for households this year.  Compared with 12 months ago, household utility bills are much higher than expected.

Former Prime Minister Liz Truss intervened on energy costs by introducing an Energy Price Guarantee from 1 October. This capped the expected average energy bill at £2,500 – a substantially lower level than the earlier Ofgem price cap (although you could pay more if you use more than the average amount of energy). It was initially announced that it would be in place for two years, but that was later changed to six months (up to April 2023) as part of a series of reversals from the government. 

Your bill will depend on how much energy you actually use so, if you’re concerned about cash flow this winter and next year, there may be ways to reduce this and save money. Although they may sound obvious, the Energy Saving Trust offers some simple steps that could add up to extra pounds in your pocket this winter.

By keeping on top of your outgoings, it’s easier to see where you might be able to save money in the future and optimise the amount you have right now. Our  budget calculator  is a simple but great tool to start with. 

The Bank of England raised interest rates to 3% in November, up from 0.1% last December, and has said it will raise them further if necessary to curb inflation. While the rate rise may not hit you in the pocket immediately – until your current mortgage deal ends, for example – it makes sense to have a financial plan in place to deal with any potential changes over the coming months. Things to keep in mind include:

• if you have a loan or mortgage with a variable interest rate, you might find the cost of your repayments goes up
• if you have loved ones hoping to step on or up the housing ladder, they may need your support 
• people with fixed-rate mortgages are likely to be affected once they reach the end of their current deal – an interest rate rise could make remortgaging more expensive.

Current forecasts indicate interest changes are likely to be small but steady, so will add up over time. If you do have some cash left over each month, it might be worth trying to chip away at any debt you owe by paying extra on your mortgage before your current deal ends. This could bring down your equity-to-loan ratio for when you do come to remortgage or renew your deal. There are limits on how much you can overpay and there might also be charges, so check with your mortgage provider first.

Our mortgage tools and calculators  could help you see what you could pay, with experts on hand if you want to discuss your options. 

The recent instability in financial markets affected consumers, investors, holidaymakers and pension policyholders. Usually, pension funds are steadier than stock markets as they have a combination of shares, bonds and property. But bond returns have experienced some turbulence this year, which has caused some to be concerned about their pensions, particularly those with ‘defined benefit’ pension schemes, which tend to hold a lot of government bonds. 

It’s worth remembering that it’s normal for pensions to go up and down in value, and the government’s policy reversals and Bank of England’s efforts to support the bond market helped settle the situation. It could be worth reviewing the impact on your own pension, if any, and speaking to an investment manager if you want to consider your retirement options further. 

Wherever you are on your journey, whether just getting started on your career or approaching retirement, it’s important to consider how you’ll plan for later life. Read more on understanding retirement plans and making the most of your pension.

Stay safe too. Pension scams have become more common since 2015, when new rules allowed over-55s to take money from their defined contribution pension pots as a lump sum. These fake investment scams can be extremely convincing, and anyone can be caught out. Find out more about fraud and scams.