5 Financial Resolutions to Manage Your Money Like a Pro in 2022
It’s the new year; it’s a fresh start. You can do a lot of things differently. Make plans, change habits, push yourself to be better, use your full potential.
The past couple of years were unexpected, and Covid-19 changed our lives in every way possible.
People worldwide have experienced financial hardship, and they are still struggling to move on.
Now that we’ve stepped into a new year, we mustn’t let 2022 go to waste.
With all the plans and ideas of all the things you’d like to do this year, there’s also another thing you can try to do this year; make an effort to be more financially stable and secure.
Let’s see some financial resolutions that you should definitely keep in 2022:
1. Have budget meetings with your family
It’s surprising how many individuals have employment that requires regular meetings, budget review, and legal overviews.
Still, it’s even more surprising that those same people typically fail to do the same things with their affairs.
You should make it as necessary as getting groceries to have an annual budget meeting with your significant other every few months.
In this meeting, you discuss the total assets you have allocated, check if you have any orphan accounts, check if you are saving correctly, whether or not all of your estate and legal documents are in order, and more.
2. Take steps to improve your credit score
Make it a point to look into your credit scores this new year. If your credit scores are low, make sure you learn how to improve them.
This is important because your credit score determines the interest rate you’ll have to pay when you take out a loan.
There are different through which you can improve your credit score:
- Reduce your credit utilization percentage by paying off as much of your revolving credit as you can. Paying up your credit card balances in full each month is the most straightforward approach to keep your credit utilization in check. If you can’t always do that, a decent way is to maintain your total outstanding balance at 30% of your overall credit limit or less.
- Do not close outdated credit accounts that you are no longer using. While the credit history for those accounts will remain on your credit report, canceling credit cards while you have a balance on other cards will reduce your available credit and raise your credit usage ratio. You may lose a few points as a result of this.
- If you have several outstanding debts, it may be in your best interest to take out a debt consolidation loan from a bank or credit union and pay them off as fast as you can. Then you’ll just have one payment to make, and if you can secure a lower interest rate on a loan, you’ll be able to pay down your debt faster. This can boost your credit usage ratio and, as a result, your credit score.
3. Save money for retirement
In terms of growing, moving forward, you need to start thinking about your future and start picturing how it’s going to be.
In that picture, you’ll see yourself living a comfortable life and enjoying it.
To do that, you need to make sure your future is secure.
If you haven’t planned for your retirement, there are a couple of ways that can help you achieve that comfortably:
- Invest in Roth IRAs: Roth IRA is an Individual Retirement Account. As opposed to the traditional IRA, this account is tax-free. You only pay taxes in this account when you’re putting money into the account. After that, all subsequent withdrawals are tax-free. IRAs allow you to deposit up to $6,000 per year; you can contribute even more if you are 50 or older.
- 401(k): Sign up for a retirement savings plan offered by your work, such as a 401(k), and contribute as much as you can. Taxes will be lower, and your employer may contribute more. The beautiful thing about 401(k) contributions is that they are deducted from your paycheck, so you won’t notice them. Set your contributions today and develop a saving habit. Unless you earn a bonus or a raise in pay, you won’t have to make any changes, and in most situations, your employer will let you make those contributions automatically, so you won’t have to do much.
- Employer-sponsored Pension Plans: If your workplace offers a traditional pension plan, determine whether or not you are covered by the program and become familiar with its operation. To determine the value of your benefit, get an individual benefit statement. Make sure you understand what will happen to your pension benefit before you change jobs. Check to see if you are eligible for any benefits from a previous job. Also, inquire whether or not you will qualify for benefits under your spouse’s health insurance coverage.
4. Have a side hustle
If you have hobbies or skills that go unpaid, use them to your advantage. Let’s see some easy ways to get an extra income:
- Photography: If you know how to take beautiful pictures, you can provide your services and get paid for them.
- Tutoring online: The main benefit of online coaching is how easy it is. You can, for example, schedule tutoring sessions. Any number of sessions is acceptable, making it an excellent side-hustle to get into. Globally diverse students can be your customers too. You can also arrange tuition sessions on various topics.
- Freelancing: If you like writing or blogging or you have a background in graphic designing, then you can design company logos, posters, book illustrations, or you can write blogs and articles. And you can do it all from the comfort of your own home, and it’s all in your time.
- Small business: Nowadays, small businesses are getting a lot of attention. If it’s handmade and homely, then there’s a big chance that people will buy the product. If you have skills, like making beautifully scented candles or crochet dolls or coasters, anything that is creative and you know will sell for a reasonable price. Don’t let that opportunity go. Of course, going ahead with something like this will need you to invest some capital into it, and you’ll have to be entirely sure and ready about it, but what if the company did move forward and you get regular sales, and you grow. You’ll have a nice little side income through this.
5. Explore payday loan relief options
While payday loans are handy, they come at a high cost. If you’re accruing payday loan debt that you won’t be able to repay within the next week or two, you need to have a backup plan.
If you can’t make the payments due to expenses or missed income, you may be worried about harming your credit or adding more interest to your debts.
But there are various ways to handle payday loan debt. Initially, start looking for a legitimate company that can provide you with payday loan solutions.
Through them, you might be able to be payday loan debt-free, with decent savings without adding more interest.
Conclusion
If you don’t have an emergency fund, set a goal for 2022 to start building one.
To get through some “rainy days,” you should have about six months’ worth of expenses in a savings account.
Building toward this goal can give you peace of mind if something happens that you don’t expect.
Right now, the economy is more uncertain than it used to be.
There are many ways to make an emergency fund. Here are a few of them.
- Make a separate account and promise yourself that you will never touch it.
- Draw up a time frame. It can be six months or a year or more, and it mostly depends on how much you want to allocate to the account.
You can also set up an auto-pay feature where a certain amount of money will be deducted from your paycheck every month.
You can set it up on a scheduled date to deduct that money every month.
About The Author: Lyle Solomon is a principal attorney for the Oak View Law Group in California, where he specializes in consumer finance. He has also written several articles on financial well-being. Connect with him on LinkedIn or tweet him at @lyle_solomon.
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Category: Financial Planning
