12 Financial New Year’s Resolutions for 2022

Improve your financial life.

Embrace the allure of a fresh start with the New Year. Now is the perfect time to commit to your financial goals, budget better, pay off debt, let go of bad habits, and improve your financial situation to reach your goals.

If you want 2022 to be a better year for your money, consider making these 12 financial New Year’s resolutions.

Budget, budget, budget.

The financial success of your entire year probably hinges on a decent budget. “An important financial resolution for 2022 should be to develop a financial plan,” says Cynthia Pruemm, investment advisor and 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 thought of being buried in data and can’t afford an accountant, Pruemm suggests using software like Quicken.

There are also many personal finance websites and apps that can help with budgeting, including Mint.com, PocketGuard, or You Need a Budget. Or you can go the old fashioned way with a pad of paper and a pen. But you can’t argue with a resolution like budgeting.

Save something every month.

One thing that should definitely be in your budget is how much you plan to put aside in an emergency fund or a savings account, or both.

“Another resolution should be to save every month, regardless of the amount,” says Pruemm.

If you’re struggling to save money, Pruemm suggests Acorns.com, “where your spare change on every debit or credit card transaction is put aside in a separate savings account. You’ll be surprised how quickly all that aftermarket change can add up.

And when you shop online, she says, “buy the same products through (cash back websites) Rakuten or Ibotta where you get quarterly refunds for just shopping through their website. “

Pay yourself first.

Paying yourself first usually means “paying” for future personal money. It’s important to do this first, because if you pay yourself last, there’s a good chance you won’t pay yourself at all.

An easy way to pay yourself first is to contribute to a 401 (k), especially if your employer offers matching contributions, says Brian Stivers, investment advisor and founder of Stivers Financial Services in Knoxville, Tennessee.

“I suggest that you set a goal to set 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 will only have to contribute 6% of your income to pay yourself 10% of your income for retirement.

Paying yourself first can also mean putting money in a savings account or emergency fund before paying for other expenses.

Evaluate your catering budget.

Stivers suggests finding cheaper restaurants – or, of course, you can always cook more.

“It’s not uncommon for a couple to eat out three to four times a week when both are working,” Stivers says. “Whether it’s take-out or on-site dining, it 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 eat or order three to four times a week.

“So if the budget for ‘restaurants’ were cut in half to $ 50 to $ 100 a week, and you put the money in a savings account at the bank, or even in a savings pot at the home, by the end of 2022, you will have saved $ 2,600 to $ 5,200 per year for other needs, goals or dreams, ”says Stivers.

Check your subscriptions.

Take a look at each service you’ve subscribed to and see if there are any you could eliminate, suggests Pruemm. “It happens all the time – you sign up for a 30 day free trial and forget to cancel when the trial ends. You tell yourself you’ll cancel the subscription before the next automatic deduction and life arrives and you forget again.

She has a good point. These days, it’s not just entertainment streaming subscriptions to follow, but others from cosmetics to razor blades to meal plans. Previously, cafes were a hotbed of money mismanagement, according to personal finance experts, but in recent years it’s the subscriptions.

Start investing.

The investment goes hand in hand with the “pay yourself first” resolution we mentioned earlier.

“Make a monthly investment plan of x dollars each month and stick to it, regardless of what’s going on in the markets,” says John Hunter, director of the MBA program and practice professor at Le Moyne College in Syracuse, New York. .

There is plenty of advice available on building an investment portfolio for beginners. Hunter advises investing for the long term.

“Follow historical market returns and don’t even think about the ups and downs of the markets. Don’t try to time the markets. The markets are smarter than you. Think long term, act long term, be disciplined and you will achieve your goals, ”he says.

Make a will.

Having a will is important, especially if you have a lot of assets.

“If you don’t have a will, make 2022 the year you write it,” says Brian Porter, professor of management at Hope College in Holland, Mich. “You don’t have to hire an expensive lawyer and pay several thousand dollars. Alternatively, there are online will makers that cost very little, around $ 100. These include Quicken Willmaker & Trust and LegalZoom.

Maximize credit card rewards.

Porter has a more fun financial solution for credit card holders: Maximize your credit card cash back rewards, miles, or points.

“I hope you are already paying off any credit card debt monthly and paying no interest charges,” Porter says.

If so, he suggests applying for a new rewards credit card if you don’t already have a good one.

“There are many reward credit cards that offer generous sign-up bonuses, such as 100,000 miles for spending $ 3,000 in the first three months. Bonuses are often valued at $ 1,000 or more, ”says Porter. “The $ 3,000 threshold needed to earn the bonus is easily reached with purchases you may already need to make, such as home and auto insurance.”

Analyze your insurance.

It might seem like a chore, but it’s a smart financial chore to do, says Siyu Wang, behavioral economist at the Institute for the Study of Economic Growth at Wichita State University.

“You may want to reconsider your insurance choices at the start of each year, especially in 2022. Without so much uncertainty, do you want to pay more for your health deductible? Wang said.

In addition to evaluating your health insurance choices during open enrollment, take a close look at your home or auto insurance. Have you had these policies forever? Maybe you are paying too much. You may also want to purchase insurance.

“Do you and your family have life insurance? Have the beneficiaries been configured appropriately? Wang asks. “These scenarios may seem distant, but it’s always best to be prepared. “

Pay off the debt.

Especially if you are in your thirties or more with significant debt, it is very important to make a plan to reduce what you owe, even if you have to make financial sacrifices to do so.

“If you can’t reduce your debt to zero, try to minimize the balance. In order to enjoy your financial freedom, it is important that you control how much money you owe, regardless of the purpose of the debt, ”says Ganesh Pandit, associate professor of accounting at the Robert B. Willumstad School of Business in London. ‘Adelphi University in New York.

“Remember that at the end of the day you want to wake up each day knowing that you are in control of your financial situation and therefore your life,” says Pandit.

If you are considering refinancing, do it quickly.

If refinancing is on your agenda, it shouldn’t be left until 2023.

“If you have a house and you haven’t refinanced yet, what are you waiting for? Asks Stacy Mastrolia, associate professor of accounting at the Freeman College of Management at Bucknell University in Lewisburg, Pennsylvania.

“For years, interest rates have been the lowest in history, but there are signs – especially rising inflation – that interest rates are likely to rise in the short term. . The opportunity to lock in today’s historically low rates for most people’s biggest monthly payment and asset could be coming to an end, ”she said.

Start a 529 plan.

As tuition fees rise, it’s especially important to save early with a 529 plan, a federal tax-exempt university savings account.

“Although 529 education savings plans have been in existence since 1996, they are still not widely used by families,” explains Mastrolia. “Among families who save for their children’s university expenses, only 30% of the savings are in tax-efficient 529 accounts. “

She points out that 529 plans offer tax-free federal growth if the account is used for qualifying education expenses, and this could include not only college education, but tuition fees for private schools as well.

12 New Year’s Financial Resolutions for 2022:

– Budget, budget, budget.

– Save something every month.

– Pay yourself first.

– Evaluate your catering budget.

– Check your subscriptions.

– Start investing.

– Make a will.

– Maximize credit card rewards.

– Analyze your insurance.

– Pay off the debt.

– If you plan to refinance, do it quickly.

– Start a plan 529.

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12 Financial New Year’s Resolutions for 2022 originally appeared on usnews.com

Update 08/11/21: This story was posted at an earlier date and has been updated with new information.