Ready to get your finances in order for 2022? Getting your finances in order can feel like a lot of work, but spending just a little time getting everything straight can set you up for financial success in 2022. Here’s how.
I love the month of January for the reflection it inevitably seems to bring each year. I usually get a renewed sense of hope that I’ll be able to tackle all of my financial goals. So, if you’re like me hoping for a good 2022 (at least as far as our finances are considered), here’s how to get your finances in order for 2022.
DO A LIFE AUDIT AND SET SOME GOALS
Start getting your finances in order for 2022 by setting some goals and performing a life audit. Write a list of the things in life that are most important to you that you want to get out of life. This might include things like, starting a family, becoming debt free, buying a beach house. Whatever it is that you desire the most– it can be anything. Then, set goals to help you achieve those things. Let’s use the beach house goal as an example. Imagine one of your most important life goals is to own a beach home. But you are saddled in debt, which makes it hard to get a mortgage and to afford the monthly payment. Your goal could be to pay off your high interest debt this year, and then buy a beach property that can also serve as a short term or vacation rental so it can help you pay its mortgage. Those are the kind of specific goals you should set for 2022.
EXAMINE YOUR SPENDING
Once you’ve done a life audit and set some goals, you should examine your spending. Track your expenses for the last 3-4 months and find out where your money has been going. Find places where you can make cut backs. Maybe you’ve been lax with your grocery spending and you could make some cut backs on your grocery spending, or shop sales at grocery stores and use coupons or cash back apps. Or you could swap cable for one or two subscription services like Hulu. Take a close look at where every dollar you earn is going. You might be surprised how easy it is to tighten things up, to help you meet your other financial goals.
CHECK ON YOUR SAVINGS
After you have a good idea on what your past spending has been like, you should check on your savings. Literally– check on them. Log in to each savings account you have, including retirement accounts, and see where you stand. How are you doing saving for retirement? What does your emergency fund look like? Do you have at least 3 months worth of expenses saved? If not, go back to your goals and set some for this year to build up those accounts.
CREATE A BUDGET
After you have a good picture of your spending and savings, you can create a budget. Set goals in each area of your spending, based on your past spending and stick to it.
I personally like to budget by paycheck. We get paid twice a week, so I budget the first pay check for the bills that are due the first two weeks of the month, and the second pay check for the bills that are due the second half of the month. I have a financial calendar and I write the days I get paid and the days certain bills are due, even if they are set up on auto draft. That way I know when what money is going where.
A budget can be as simple or as complex as you’d like. If budgeting is overwhelming for you, try an overall spending goal, like “I won’t spend more than $3,500 this month on all of my expenses.” This is also known as the Easiest Budgeting Method Ever, which you can read about here.
GET SOME TOOLS
Last, but certainly not least, set yourself up for financial success this year by using the right tools. There are plenty of free apps out there that can help you pay off debt, budget, and invest. I like Mint to help me track my spending to keep me on a budget. I still use my own excel sheet and check my online bank statements, but it helps me keep things organized and make sure things are on track.
I obviously highly recommend Paidback if you are trying to pay off debt, especially high interest debt like credit card debt. You can track your progress and it will send you custom AI recommendations for how to pay off your debt faster. You can also connect with our community there.
If you are just getting started investing, you can use apps like Wealthfront to get started in the stock market, or Coinbase for crypto. They make it very easy to get started.
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