How to avoid financial mistakes in 2022

4 tips to keep your account balance in the green

We all want to start the new year strong: in work, in our relationships, and in our finances. A great way to kickstart your financial goals is to analyze last year’s expenses to determine what can stay and what must go. As you build your 2022 budget, consider these 4 tips to keep yourself on track, and even push yourself past your savings goals.

Avoid payday loans

Payday loans may sound good for borrowers in immediate need, but they can be a trap. Lenders who offer these loans, also called cash advances, will charge higher-than-average interest rates without considering your credit history or ability to repay the loan, or asking for collateral to protect themselves. Typically, the amount borrowed is a portion of the borrower’s next paycheck.

To avoid this unhealthy cycle, start with a budget! Budgeting is a vital part of your personal financial success. Identify your total monthly income, then subtract your total expenses, like utilities, loans, groceries, childcare, and even entertainment. If that leads to a negative number, you’ll need to cut out some expenses. Adjust until the final number is in the green, which will give you room to save, and maybe a bit extra on hand to treat yourself.

Use credit cards the right way

Credit cards are tricky. With just one swipe of plastic at the mall, you could buy yourself a whole new wardrobe. But what happens when that hefty bill hits you next month? Credit cards do not pull directly from your checking account like a debit card, so spending can easily skyrocket. Try to use your credit card as a credit builder. Start early with a small credit limit and keep the amount of cards to a minimum so you don’t allow yourself to overspend. Lastly, only buy what you know you can pay back at the next due date because if you miss a payment, not only does it ding your credit score, but also it adds interest. By reducing (or eliminating) interest payments, that money can be redirected toward your savings account to protect you and your family for years to come!

Set up automatic payments

Have you forgotten a utility payment or two? It can be difficult to keep track with so many bills coming in and payments going out. And once you miss a payment (just like a credit card), fees can add up quickly. Put your mind and your pocket at ease by signing up for automatic payments. Each month, the loan servicer or utility company will automatically deduct your payment from your checking account so you’ll never miss a beat. The other important thing is to keep a written record of these withdrawals, like receipts or a checkbook, so you’re aware of your account balance and can provide proof of payment if requested.

Ask for help

Lastly, find help if you need it. There’s no shame in asking a friend, family member, or your local banking advisor for assistance. Maybe you’re wondering where to start on a budget or which savings account to open - whatever the question, it’s important to find out what’s best for your situation and get started. If calling or coming into the bank isn’t for you, explore the 50+ resources in our free Education Hub! From the basics of a checking account to saving for college to owning a home, there’s something for every stage of your personal financial journey.

We understand the common fears behind finances, but knowledge is power. If you have any questions, our team of banking advisors will be happy to help you find the right service for your needs. Make an appointment today!

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