The new year is the perfect time to reset your financial goals. Whether you’re becoming more sophisticated in your money management or just starting out, everyone has action steps they can take to shore up their financial picture. Here’s exactly how to meet your 2022 financial goals.
1. Be debt-free
This is a big goal for many of us. It is important to include debt-free as a goal in your financial plan. This could take several years depending on where you start. There are some interim steps that can be taken and small milestones to celebrate along the way.
The first step is to get a clear picture of what you owe and at what rates. Also, when. Next, evaluate your personal situation. You may want to consider all of your balances together and start with the highest-rate debt you’re paying first. Another option is to use the snowball method. This involves zeroing in on any outstanding balances, and then moving on to the higher-payoff win endorphins.
You can also attack debt by “theme” and stretch out that final destination to make your goal feel more realistic but still clear and actionable. This could be as simple as deciding to pay off student loans five years earlier or to have all retail store credit cards paid back within 18 months. Even though long-term goals are possible, it is possible to start small to address debt.
2. Stop impulse buying
Impulse purchases are often disguised emotions. Start by deleting all saved cards from your favorite apps and accounts. This will help you spend with your head, not your emotions. That extra step of inputting your card number—even if you know it by heart—gives you another moment to reflect on your purchase.
Also, take some time to establish your big picture financial “why” this year. What are you trying to do to reduce splurge spending and other financial goals? Do you want to feel financially secure? Are you looking to build a family? You will find motivation to keep going if you keep your larger goal in mind.
3. Finally, create (and stick to!) a budget
If you have difficulty sticking to a budget, you might not be the right person for you. Instead of committing your wholeheartedly to a major budgeting program for the year.
Spend a weekend exploring three types of budgeting. For example, set up a spreadsheet, download an app that appeals to you, or dole out some cash into real or virtual “envelopes.” Then, plan a three-month block where you’ll test each one for a month. This is enough time to see if the method resonates through all of your different payments and income sources but not so long that you get fatigued if it’s not a fit. The best budget system is one that you can stick with and where it feels effortless, even though it takes some discipline.
4. Be happy with your money
There are many ways to restructure your relationship with your finances. For example, if you didn’t grow up talking about money, it can be uncomfortable to plan finances with your partner. As with all things in life, how we handle our finances determines how we live.
What are some patterns you see in your financial decisions? Are they serving you long-term or larger goals? To make peace with money, you may need to look at the beliefs and history that have shaped how you relate to finances. Many great books and podcasts can help you create a positive mindset about money.
5. Get paid what you’re worth
Your positive money mindset should be complemented by the knowledge that you, your skills, and your time are valuable. Even in a challenging economy, you deserve to be paid what you’re worth. Glassdoor and Salary allow you to get an idea of the market’s current price for your role.
Do you know a recruiter. Many of them are happy to have informational conversations around compensation, even if you’re not in the market for a new job. You can also look at the top skills employers are looking for. These skills can be added to your professional toolkit to help you start a salary negotiation.
6. Save for an emergency
If the last two years taught us anything, it’s that life throws curveballs. Although it is difficult to determine how much emergency savings you will need, small savings can provide some peace of mind. Take a look at all your monthly spending to start building your emergency savings. What would be the minimum you would need to survive for 90 days if your partner or you lost your income?
Be determined to save money and know that even a small amount of cushion can provide you with some security. Higher earning individuals may be more aggressive. High-paying jobs are often harder to source quickly and may take longer to onboard, meaning you’ll want a little more financial backup.
7. Be prepared for a major purchase
If you’re ready to take the plunge on buying a home or another major purchase, it’s time to get your finances in order. You don’t have to save money to prepare for this big purchase.
Take a look at your credit report to see what a lender might see. Discuss pre-qualifying for your loan through your bank or lender. You should also have your financial statements, tax documents, as well as some reference letters, centralized for easy access. As more people use remote work, there are many new home markets. It is important to be ready to move quickly if your dream home comes on the market.
8. Start investing
There are many things to consider when investing. But if you’ve got your savings goals already locked down, take the next step. The long-term, the future you are the best place to plan. What is your retirement savings strategy? Understand if you’re appropriately taking advantage of all of your work’s 401(k) matching.
Next, find out if your employer offers investment advisory services, such as connecting you to financial planners. If your employer does not offer other investment advisory services, there are many investment firms that can help you explore investing beyond the retirement products. Just remember that everyone’s situation is completely unique and that investments can lose value, including the entire original amount you invest. This means you should have a clear understanding about your goals and the risks involved in these accounts.
9. Create a new income stream
It is important to see our financial goals as two sides of one coin. Yes, it’s great to reign in and understand spending, but we should also focus on how we can expand and diversify our income streams. You don’t have to make your hobby a business. You might be able to find new ways to make money.
This is possible because of the virtual world. What if you could turn your weekend lessons in violin into virtual music lessons? What about selling cross-stitch patterns that you created during lockdown on Etsy? You can be creative and let your imagination run wild.
Source: The Every Girl
