8 ways to better your finances in 2022

According to Times Union:

Did you spend too much this holiday season? If the sight of your credit card balance is scarier than political chatter at the Christmas dinner table or Aunt Sue’s mysterious homemade fruitcake, take a breath.

As we approach the end of another year, the calendar shift is a fine time to freshly assess finances, which is probably why money-related New Year’s resolutions are among the most popular annual pledges.

Nearly two-thirds of Americans make New Year’s resolutions. Sixty-eight percent surveyed for Fidelity Investments’ annual Financial Resolutions Study claim they are considering making a financial resolution for the new year, second only to a personal promise to improve health and well-being.

Making a money-related resolution may be one of the best ways to improve your financial health, according to Fidelity. People who made financial resolutions at the start of 2021 are more optimistic about the future and more financially secure. More people see the value of making plans and sticking with them, too. In 2021, 71 percent of Americans were able to stick with a financial resolution versus 58 percent in 2020. Looking ahead, 72 percent are confident they’ll be in a better financial position in 2022 than they were in 2021.

When it comes to money, the top three financial resolutions are what you might expect – to save more, pay down debt and spend less. But there are a number of things — some simple, some more complex — you can do to achieve greater financial contentment.

“One of the biggest resolutions people should make for 2022 is to maximize credit card rewards while minimizing credit card interest. If you can do that, you’ll be spending within your means, saving hundreds of extra dollars, and putting your finances in a safer position overall,” said Jill Gonzalez, an analyst with personal finance site Wallethub. “Alternatively, some of the most effective and popular financial New Year’s resolutions include making a realistic budget and sticking to it, looking for a better job and staying on top of your credit.”

Here is a list of financial resolutions you can make to save more money, reduce debt, curb spending and avoid financial stress, courtesy of Wallethub.com.

Make a realistic budget and stick to it: The best way to make a budget is to gather your bills from the past few months and make a list of all your recurring expenses. Then rank them in order of importance, with true necessities such as housing, food and health care taking the top spots. After that, cut from the bottom of your list until what you make exceeds what you plan to spend. Finally, keep track of your monthly spending throughout the year to make sure you’re abiding by your budget.

Pay bills right after receiving your paycheck: Taking care of monthly obligations before letting yourself indulge in any luxury expenses is a helpful strategy. It gives you a better sense of what you can truly afford. It also helps you avoid ever having a late payment reported to the major credit bureaus, which is one of the easiest ways to damage your credit score.

Add one month’s pay to your emergency fund: Almost half of Americans do not have a rainy-day fund, according to the Financial Industry Regulatory Authority. Like someone without insurance, people who lack an emergency fund are tempting fate. So, building up some reserves should be one of the first orders of business for any financial makeover. Try building a fund with 12 to 18 months’ take-home income. It’s important to understand that won’t happen overnight. In other words, you don’t need to put the rest of your financial life on hold until your emergency fund is complete. Rather, chip away at it over time.

Use different credit cards for everyday purchases and debt: The Island Approach involves using different accounts to serve different financial needs, as if they are a chain of islands. For example, use a rewards credit card for everyday purchases and a zero-percent APR card for balances that you’ll carry from month to month. Doing so enables you to get the best possible terms on each card, rather than settling for average terms on a single card. It will also help you reduce the cost of your debt, considering everyday purchases won’t be inflating your average daily balance.

Repay 20 percent of your credit card debt: Americans owe way too much credit card debt: roughly $8,000 per household. So plan to pay off 20 percent of what you owe over the course of 2022. That would amount to about $1,600 for the average household, requiring monthly payments of $133 with a card offering zero percent on balance transfers for at least 12 months. You can use a credit card payoff calculator to crunch the numbers in your situation, and if you can afford higher payments, by all means make them. The sooner you can reach freedom from debt, the better.

Sign up for credit monitoring: Signing up for free credit monitoring will enable you to receive an instant notification any time there is an important change to your credit report. It reduces lag time when spotting issues and gives you the peace of mind that comes with knowing you won’t miss anything.

Make sure you have enough insurance for a catastrophe: COVID has shown how fragile and precious life is. And if other people depend on you, the pandemic should illustrate the importance of making sure those people are taken care of, even if you’re not around or able to work. That means taking steps such as purchasing life insurance and disability insurance, in addition to making sure you have enough health insurance coverage.

Look for a better job: Sometimes, we get so caught up in spending less and saving more that we forget to address the other side of the equation — how much we earn. But the benefits of finding a higher-paying job could outweigh everything else. The pandemic also illustrates how impactful it can be to find the right remote job opportunity. Working remotely allows you to save on commuting costs, avoid health risks and gives you more freedom to choose where to live. And moving somewhere with a low cost of living would, in turn, stretch your money a lot further.

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