How to improve your finances in 2022

Make sure your dreams and your budget are on the same page

A new year has arrived! Like us, you’ve probably been thinking about your 2022 plans for months. Maybe you’ve scouted an incredible vacation destination, found the perfect car, or decided on a plot of land to start building your forever home. But, have your finances caught up to these dreams? January is the perfect time to decide how you will accomplish this year’s goals while maintaining a financial safety net.

Establish Expectations

Setting expectations is an important first step in any project, especially when it comes to your (and your family’s) money. Review last year’s spending habits and determine what will stay and what will go. If you spent $200 per month at restaurants, try cooking dinner more often and see your savings grow. It’s vital that your family is on the same page and will commit to following through with the proposed budget all year. And, don’t be afraid of the unknown! There are countless free financial literacy courses, like our Education Hub, that can help you explore new financial territory with confidence.

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Start with debt

Creating a budget that includes debt repayment is critical, and tackling credit card debt is a great first step. Credit cards often rack up the most interest, meaning you’re paying more in the long run while the balance sits. Other debt could include student loans, personal loans, or a mortgage or car payment. These loans will have a pre-planned repayment schedule, but a late or missed payment can result in fees or an interest rate increase. Missing a payment also negatively impacts your credit score, so set reminders for yourself or sign up for automatic payments to stay on track.

Prepare your family’s future

If you have kids or plan to expand your family, consider starting a 529 plan or a separate savings account dedicated to their education. College tuition has increased dramatically, and with inflation rates affecting costs for food and fuel, help your children succeed by setting them up for success early.

Boost retirement contributions

Save, save, and save some more. Your savings are your safety net when unexpected life events occur. Start out small and increase your retirement contribution each year, aiming to contribute 15% of your paycheck. If you can’t reach that yet, try to contribute at least the minimum to receive your employer’s matching funds. That’s free money, so don’t miss out! The more you save now, the more peace of mind you will have 15, 20, 30 years down the road.

Set aside a “fun” fund

Here’s where the new vacation destination comes into play. If able, include a “fun” line item in your monthly budget to start building this type of savings. Arrange a date night, road trip with a friend, or enjoy a family vacation without interrupting your normal saving and spending habits. This fund can take months, even years, to grow, so start early and (patiently) allow your finances to catch up to your dreams.

The most important thing is to be prepared. Understand what you have, where it’s stored, and how much you plan to spend this month/year. That way, when unexpected expenses occur, you’re able to adjust quickly. If you’d like more help, make an appointment at any of our locations and a banking advisor will be happy to assist you!

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