How will you spend the new year? Will you be continuing your current financial plan, or do you need to make some adjustments? Here are eight helpful financial planning tips to help you reach your financial goals in 2022.
1) Start with the end in mind
This a common saying, but one of great importance to financial planning. It’s easy to forget about your future when you’re busy worrying about today, and what will happen later. But start with 2020 in mind—or even 2022—and you can get a better idea of where your money is going now and how you can better prepare yourself for what’s ahead. Even if it seems far away, there are certain changes that can be made today that will help you achieve your goals tomorrow.
2) List your long-term, mid-term, and short-term goals
The most difficult part of financial planning is making it a habit. Start by listing your goals in three categories: short-term, mid-term, and long-term. Then make sure you have an action plan to get there. Whether you’re using software or writing it down in a planner, it’s helpful to list your steps on paper so you can keep track of what still needs to be done—and have something to refer back to if you get off track. It may sound like common sense now, but having written lists makes following through much easier!
3) Calculate how much you need
What will your nest egg look like when you retire? To answer that question, use online tools such as financial calculators to see how much money you’ll need each year in retirement. Then compare those figures with what your savings and investments are projected to be worth. Do you have enough money on hand to meet your needs? If not, it’s time to start saving aggressively—and that means making big changes in how you approach spending.
4) Know your net worth
The first step to becoming financially secure is knowing where you stand. Track your spending, pay down debt, and set up an emergency fund so you’re able to weather any setback. Don’t feel like you need to make radical changes immediately; by taking small steps each month, you can inch toward financial stability. By 2022, when many millennials will be reaching their peak earning potential, it’s important that they have everything in place to support themselves—not just financially but emotionally and mentally as well. You don’t want to wake up one day in 2022 with only a handful of money left in your bank account; take steps now so that doesn’t happen!
5) Plan your budget and stick to it
The holidays are long gone and 2018 is right around the corner. Now is a great time to take stock of your finances and start planning ahead. Establishing budgets is an important part of financial planning, but they can be tricky, especially when you’re trying to find the balance between saving money and sticking to your budget while still enjoying life. To help you out, here are some tips to keep in mind as you plan your budget
6) Set up an emergency fund
The US is in one of its worst credit crunches ever. One area that may be particularly hard hit is student loan debt, which has nearly tripled since 2003, according to Student Loan Hero. If you’re feeling bogged down by debt payments or other financial obligations, it’s time to create a budget—you can do it online with sites like Mint and LearnVest. It will help you figure out exactly where your money goes each month and make strategic decisions about where to cut back so you have more cash on hand at the end of each month. Create another plan that focuses on retirement savings; no matter how old you are or how much money you have saved already, saving in 2019 is always better than saving in 2020.
7) Separate your needs from your wants
You’ve heard it all before, but many people still don’t practice what they preach. The key to controlling your finances is realizing that you need much less than you think you do. Whether that means housing or food or clothing, deciding on what’s truly important will help keep your finances in check and help put your money to better use. Start by listing things that fall into each category and seeing where your needs end—and wants to begin.
8) Create a plan to reduce debt
It’s simple, actually. The surest way to avoid financial trouble is to avoid incurring debt in the first place. If you don’t have any debt, then you don’t have anything to worry about. Unfortunately, that isn’t realistic for most people — we all borrow money from time to time — so if you want to keep stress at bay and your finances healthy, it’s important that you take steps toward reducing your debts now.