Of all the New Year’s resolutions I don’t keep — Run a marathon! Drink a glass of water first thing in the morning! — it’s the failed financial goals that leave me most frustrated. I start each January with a budget in place, IRA contributions in mind, and promises to brew my own coffee instead of buying it, yet finish each December no more financially flush than the previous year.
I am not alone in this — financial resolutions are particularly hard to stick to, explains Shari Greco Reiches, a wealth manager, behavioral finance expert, and author of Maximize Your Return on Life: Invest Your Time and Money in What You Value Most. “Often, I find people make unrealistic financial resolutions when it comes to a budget — and when they realize early on that they won’t achieve the resolution, they give up,” she explains.
So, how do we make sure your 2022 financial goals are realistic and achievable? The most important thing is to make sure your goal is “based on your own core values,” Greco Reiches says. If travel is really important to you, for example, setting up a specific savings fund for future trips might help motivate you more than putting the occasional deposit into a more ambiguous savings account.
It’s also important not to compare your financial situations to others’, she adds. If you work hourly, on commission, or in any job where you’re not getting a reliable direct deposit every two weeks, for example, setting up automatic withdrawals to a savings account or retirement fund might not work for you. Instead, maybe you’ll make quarterly contributions.
Next, “the financial goal should be specific, including the exact process needed to achieve the goal,” Greco Reiches says. Think: setting aside 10 percent of every paycheck when you get it or committing to meal prepping every Sunday afternoon to avoid unnecessary mid-week takeout orders.
When in doubt, keep it simple and focus on small steps. “Prioritize the goal you want to start with, set a deadline for each, and track your success,” says Greco Reiches.
Here are five actionable, realistic, financial resolutions we can all achieve in 2022.
Focus on Savings
The uncertainty of the past two years has made the oldest financial resolution in the book more relevant than ever. Luckily, there are a million ways you can approach saving — setting up a retirement account, opening your first investment, putting a portion of each paycheck away. To start your resolutions, pick one and follow through. “Please don’t wait until you get that raise,” says Greco Reiches.
A few smart places to start:
- Automate your savings with an app like Digit or Acorns.
- If your employer matches 401k contributions, make sure you’re maxing out. “An employer match is a free money — take advantage of it,” says Greco Reiches.
- Open an investment account. Apps like Ellevest make it easy to set up automated monthly contributions.
- Open an emergency fund if you don’t already have one — seed it with any end-of-year bonuses and put 10 percent of every check you get in 2022 straight in.
Prioritize your healthcare
If nothing else, the pandemic has stressed the importance of healthcare. Not staying on top of it can be costly — especially if you’re one of the millions of people who quit their jobs this year.
Know your health insurance situation: how much it costs, what it covers, and what you’ll have to pay out of pocket this year. Then, “pick up the phone, go online, just schedule your doctors’ appointments,” says Greco Reiches. Staying on top of your annual physical, dental cleanings, and specialist visits can help cut out unexpected health costs.
Start a budget
Every financial expert stresses the importance of budgeting for a reason. To take a smarter approach this year, look at your cash flow and expenses for 2021 and 2019 (pre-pandemic). Take a look at both income streams and expenses to determine where you’ll fall in 2022. (For example, if you were working from home last year but will be back in the office in January, make sure to include those transportation costs.)
Check your spending against the 50/20/30 Rule, says Greco Reiches. Fifty percent goes towards needs (rent, food, insurance), 20 percent goes towards savings, and 30 percent goes towards wants.
Now here’s the key: you have to actually track it. “Don’t make it too complicated,” says Greco Reiches. You can use an excel sheet or pad and paper if that’s your jam or automate the process. Set up spending alerts on your credit and debit cards, so you know when you’ve hit your monthly limit or link your accounts to a budgeting app.
Track your assets and liabilities
Assets include all the money you have available to you — your checking and savings account, retirement account, investments — in addition to illiquid assets like the value of your home (if you own) or car. Your liabilities include all debts — loans, mortgages, unpaid credit card balances.
“These numbers are a reflection of your financial health,” says Greco Reiches. Do a self-audit every month, checking in to make sure your liabilities are trending downwards, and your assets are growing. Greco Reiches recommends paying off any credit card debt first since this typically carries the highest interest. When you finally pay it down, be extra financially savvy by rerouting whatever money was going to your debt repayments monthly into savings.
Know when to hire a pro
If you’re feeling chronically stressed out by your financial situation, consider bringing in an expert. “People hire a financial advisor when they want more clarity on their finances, a roadmap for the future, and peace of mind — they often want a partner in decision making,” says Greco Reiches. Look for an advisor that specializes in your biggest financial concern, whether that’s debt repayment, investing or holistic financial wellness. (Just make sure you understand their expertise and fees before hiring anyone.)
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