In a recent article released by Financial Advisor IQ, the news about personal finance in 2022 wasn’t all bad.
Shocking, I know.
Yes, there are the worries that many people across the country have about their finances:
However, according to the article, 62% of Americans are “more hopeful about the new year” and “feel optimistic about the future.” Seventy-two percent are “confident that they’ll be better off financially in 2022.” In fact, most Americans say they developed better money habits in 2021.
That’s what my financial planning ears like to hear.
While the study mentioned in the article was full of helpful statistics, it wasn’t as helpful when it came to suggestions about keeping financial resolutions many people are making at the beginning of the year. Let’s take a look at the top three financial resolutions and see if we can’t come up with a plan.
It’s almost impossible to know where you stand financially if you don’t have at least a basic budget and track where you are spending. It doesn’t have to be overly complex and there are lots of tools out there to help you. US News & World Report has outlined 10 tools here – from old school pen and paper to free apps and banking tools!
When it comes to having an emergency fund, enough to cover 3-6 months expenses is a good rule of thumb starting place - but that can vary and depending on many factors including if you have a partner who works, how stable the industry you work in is, etc.
From the Financial Advisor IQ article, “…unexpected non-health emergencies and family health emergencies are the top setbacks Americans anticipate in 2022, cited by 26% of respondents and 22% of respondents respectively.”
In other words, if you don’t have enough in an emergency fund, this should be a top financial goal.
When we think of setting and achieving financial goals, that can sometimes feel like an overwhelming task. However, once they’re identified you can start taking small steps in the right direction. And if you’ve set goals in the past, this could be a good time to look at what you’ve achieved, what you still need to work on, and what needs to be altered (we all change; our financial plan might need to as well).
Here are some tips from Principal.com to get you started:
1. Give your money a “job.”
2. Categorize each financial goal as short-, mid- or long-term.
3. Set a target date for each financial goal.
4. Prioritize each financial goal: critical, need, or want.
5. Know how much you have vs. what you still need to save.
After the last couple of years, we could all use a bit of good news and the fact that more Americans are being thoughtful about their financial goals is certainly something to celebrate.
Remember that small tweaks can lead to some big changes; don’t look at these as enormous goals that need to happen RIGHT NOW – that’s the easiest way to get overwhelmed.
Need an accountability partner or someone to help you figure out your next step? Shoot me an email at [email protected].