Everyone loves a good New Year’s resolution during this time of year, but setting financial goals can really be a great start to a new year.
When we hear the term “New Year’s Resolution”, we tend to think of weight loss and exercise goals. It’s time to include financial well-being to our goals and priorities so that we can begin to lead financially healthy lives as well.
Here are five money goals to aim for in 2022:
1. Get on a budget- It may sound cliche, but it is the best first step in beginning your financial journey. The biggest key takeaway you should be able to uncover in your budget is knowing what you are spending versus what you are bringing in each month. The more you learn from your spending habits, the more you realize what your actions steps need to be to reach financial success.
2. Start a savings plan- There is a rule of thumb many financial educators use to help people understand what percentage of their money each month should be set aside for spending and saving. This rule of is called the 50/30/20 Plan. According to this plan, 50% of your monthly net income should be allotted for your living expenses and other needs. The remainder of your income would then be divided as such: 30% for your wants and 20% for savings. Some people like to switch the 30% to savings and 20% for wants as their spending habits begin to shift and they become more goal oriented.
3. Create your Plan B: Plan for the unexpected-What’s your Plan B? Too many people across the country suffer from stress in relation to their finances. A great way to start this new year on the right path is to alleviate stress by creating a plan. What happens if your car needs new tires or brakes tomorrow? What if your furnace needs to be replaced? These are some common situations that always manage to squeeze themselves in at the absolute worst time. By having a plan in place, such as a separate emergency savings fund, you can have that money always set aside for the unexpected situations life throws our way. For example, it is always a great sign of financial health to have 3-6 months’ worth of your monthly expenses saved up as an emergency fund. This fund acts separately than your regular savings account because this account is one you can feel at ease utilizing if you absolutely need to.
4. Fix or Maintain your credit- There always seems to be a diverse argument in whether people need to have good credit or not. The honest reality is, if you want to qualify for low rates for a home, car, or business loan, you will need to have good credit. What we don’t hear often enough is the fact that credit is only bad when we lose our control on spending and allow it to get us into massive debt. Credit can be a useful tool for several things, including solidifying a job offer in certain industries. You can use credit to your advantage by getting a credit card that offers rewards or points. By getting a rewards credit card, you can earn points and rewards just by paying your monthly bills with that card and then paying it off each month. Paying your card off each month will help you control your spending, keep your credit report healthy, and earn you rewards at the same time.
5. Pay down debt– Becoming debt free is a great feeling and can alleviate many financial stresses. Starting the new year by creating a plan to payoff your debts can really motivate you to pay them off even quicker. Depending on the amount of debt you have, consider paying your lower balances off first and work your way up to the higher balances. It is an amazing feeling when you begin to see your loans and credit cards being paid down. The main goal is to reach financial freedom where you feel more secure financially and do not stress about your money situation. Financial freedom does not have to come after retirement, this can happen at any stage of your life which can motivate you to reach it sooner rather than later.
2022 is your year if you really put your mind to it. Financial freedom is achievable for anyone who wants to put forth the hard work to reach their goals. For anyone who has questions, feel free to reach out at email@example.com
Happy New Year and thanks for reading!