Five Steps to Better Personal Finances in 2022
If you’ve strayed a bit with your money in the past 20 months, you’re not alone. So much has happened during the pandemic, including working from home, scorching real estate, vacations and more.
Finding a financial focus in 2022 will give you peace of mind and more money. Start with these five steps.
1. Spend with a purpose
Make a conscious effort to use your money on things that really matter to you. Say goodbye to spending willy-nilly and random Amazon plans that show up on your doorstep. Welcome to spend on whatever brings you happiness and gets you closer to your goals.
Here’s how to implement Targeted Spending. First, make a budget for the coming month. It means thinking proactively rather than retroactively. Second, add the expenses that help you and your family stay well. Third, cut off anything that doesn’t fill your cup. (Sorry, but you still have to pay rent.) Finally, balance it out so that the money you spend is what you earn and nothing more; this will prevent you from getting into debt.
Does your budget make you a little happier knowing that you haven’t wasted any of your precious resources on things that don’t matter? It should.
2. Talk to your spouse or partner about your financial goals
You have to start talking to progress. Start with a weekly conversation about your vision for 2022. How do you want it to go? What big goals do you want to accomplish? Are you hoping to travel again or maybe start that business you’ve been dreaming of? What are your financial priorities?
This is where you have to work through your differences. Otherwise, you’ll have a fractured approach to your finances, which is terrible for your budget, bad for your money, and can hurt your relationship. Hire a financial coach or cognitive behavioral therapist with financial training, if you get stuck.
3. Save a little more for retirement
Thanks to inflation, everything has become much more expensive. We are also living longer thanks to advances in medicine. So tucking away a bit more towards retirement is a great strategy for 2022 (and beyond).
A few small steps that will really help you are to automate your contributions to your investments, increase the amount you invest every six months, and set your workplace retirement plans to a percentage of your income so that your income increases your income. contributions increase by the same proportion.
More important movements, which you should first perform by your financial advisor, could include: selling / buying real estate; change investment strategies; sell something important, like your car, jewelry, or business; improve your job (even move to a better job); and reduce your lifestyle by 20 to 40 percent. The latter means a more minimalist approach to your life.
4. Work on your debt
Just a little extra, each week at a lower rate, is what it takes to make more progress on debt reduction. So, think about what you can do to consolidate high interest balances; find some extra money to pay off the most expensive debt. You will probably need to cut back on unnecessary expenses. Consider swapping that latte for a filter coffee or selling that second car or snowmobile.
Tidying up those balances is hard work and requires consistency, but wait and see how stimulating it is to finally make progress on debt relief.
5. Make a financial plan you love
Planners have more money. We sometimes talk about two and a half times the money. Wow, isn’t it?
Be different from the 90 percent of the people who don’t have a complete financial plan and make one! Financial plans contain an expected retirement date, an approximate size of your nest egg, and what you expect to spend monthly over your golden years. In my opinion, it can really help to work with a professional to do one rather than trying to do it yourself.
As you make your shortbread cookies over the next few weeks, think about how you can apply these steps to improve your financial well-being.