Embrace the allure of a fresh start with the new year. It's a great time to commit to your money goals, budget better, pay down debt, ditch bad habits and improve your financial picture to reach your goals.
If you want 2022 to be a better year for your money, consider making these financial New Year’s resolutions.
Your entire year's financial success likely rests on having a decent budget. “One important financial resolution for 2022 should be putting together a financial plan,” says Cynthia Pruemm, an investment advisor and the founder and CEO of SIS Financial Group in Hoffman Estates, Illinois. “Part of this process is doing a financial analysis of your income, expenses and investments."
If you're discouraged by the idea of being buried in data and can't afford an accountant, Pruemm suggests using a software program like Quicken. There are also plenty of personal finance websites and apps that can help with budgeting, including Mint.com, PocketGuard or You Need a Budget. Or you can go old school with a pad of paper and pen. But you can't argue with a resolution like budgeting.
One thing that should definitely go in your budget is how much you plan to put away in an emergency fund or savings account – or both.
“Another resolution should be saving every month regardless of the amount,” Pruemm says.
If you’re struggling with how to save money, Pruemm suggests Acorns.com, “where your spare change on each debit card or credit card transaction gets set aside into a separate savings account. You will be surprised how quickly all that spare change can add up.”
And when you're shopping online, she says, “shop for the same products through (cash-back websites) Rakuten or Ibotta where you get quarterly refunds for simply shopping through their website.”
Paying yourself first generally means "paying" your future self money. It's important to do it first because if you pay yourself last, chances are you won't pay yourself at all.
An easy way to pay yourself first is by contributing to a 401(k), especially if your employer offers matching contributions, says Brian Stivers, an investment advisor and founder of Stivers Financial Services in Knoxville, Tennessee.
“I suggest you set a goal of setting aside 10% of your income each month for a future need such as retirement,” he says. "If your employer matches up to 4% of your annual income, then you would only need to contribute 6% of your income to pay yourself 10% of your income for retirement.”
Paying yourself first can also mean putting money into a savings account or an emergency fund before you pay for other expenses.
Stivers suggests finding cheaper restaurants – or, of course, you could always cook more.
“It isn't unusual for a couple to eat out three to four times a week when both are working,” Stivers says. “Whether this is takeout or dining in, this could easily add up to $100 to $200 a week or more.” It’s even worse for your budget, of course, if you have kids and are eating or ordering out three to four times a week.
“So if the 'eating out' budget was cut in half to $50 to $100 a week, and you placed the money in a savings account, or even in a savings jar at home, by the end of 2022 you will have saved $2,600 to $5,200 a year for other needs, goals or dreams,” Stivers says.
Next week, we will look at 4 more financial resolutions to consider in the 2022.
(Partially reprinted from money.usnews.com)
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