Financial Resolutions For The New Year
There’s no time like the New Year to start changing your life for the better. An excellent place to start is by making solid financial resolutions to help get you closer to your financial goals.
Vague goals like “save money” or “spend less” are too easy to fudge or simply ignore. Set yourself up for success by defining your objectives using the SMART model — make sure your financial goals are Specific, Measurable, Achievable, Relevant, and Time-based. Then hold yourself accountable and enjoy the rewards throughout 2022 and beyond!
5 SMART FINANCIAL GOALS FOR 2022:
Earn more money
Who wouldn’t want to earn more money in the new year? Sure, it can’t buy happiness — but earning more money can open up opportunities and help you achieve so many other life goals. If earning more money is a goal of yours in 2022, make it SMART. Be deliberate about how much extra money you would like to make each month and how you plan to do it. For example, rather than simply saying you want to earn more money in 2022, instead say you would like to earn $150 more each week with a part-time job, or that you would like to ask for a 5% raise. Then, once you have a specific goal set, you can work on achieving that goal.
Spend less money
For many people, this goal is far easier said than done, so be specific about how you plan to spend less money each month. A great place to start is by evaluating what you currently spend money on and identifying the areas where you can reduce spending or cut it out completely. Creating a budget is a great way to do this and get a clear breakdown of your monthly expenses and spending habits. Things like dining out, treating yourself to coffee, or making impulsive purchases may be draining more funds than you realize, and scaling back in these areas can make a big difference. Whatever your spending weaknesses, once you’ve identified them, you can start changing your spending habits by determining how much money to allocate each month for those indulgent splurges.
Pay off debt
Paying off debt is a big goal for many people. A great way to start reducing debt is to make a list of your liabilities and organize them by the annual interest rate. Those with the highest rates (most likely your credit card debts) should generally be paid off first. After you have reviewed your budget, set a goal that’s specific and realistic for you, such as paying off $400 of credit card debt each month. Focus on paying off one debt at a time while making minimum payments on your other debts. Online bill pay can help you manage debt by setting up automated payments, which can also help you avoid late fees.
Save more money
Saving money is a great goal to have, and it can help you accomplish many other goals like buying a home, purchasing a new car, going on vacation, etc. To create a SMART savings goal, start by looking at your budget. Determine how much you can afford to save each month. Then, put that savings goal on autopilot by setting up automatic transfers into your savings account every month, or even every pay period. Before long, you’ll no longer miss those dollars and you’ll be saving them instead of spending.
It’s never too early to start investing in your future and retirement. Your financial needs in retirement depend primarily on one variable: your lifestyle. Your current spending and your expected spending in retirement dictate how much you need to save to retire. If you aren’t currently saving for retirement, start now, and start small. If the company you work for offers a 401k plan, find out if they match any contributions. If they do, contribute at least that much. By contributing up to the match amount, you are earning as much “free money” as you can. If your company does not offer a 401k plan or you work independently, start a traditional IRA or Roth IRA.
As we begin 2022, consider your financial goals and the new habits that could help you accomplish these goals. With time, energy, and dedication, you can make big strides toward long-term financial security.
The information provided is general in nature and may not apply to your specific situation. MCCU does not provide legal, tax, or other advice. Please consult with your own professional services provider for more information on these matters.
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