50 ways to improve your finances in 2022

Money resolutions for 2022

Entering 2022, consumers are facing sustained high rates of inflation, possible changes to the tax code and a struggling supply chain. Amid these challenges, and taking into account the last two years of crisis, it may be more important than ever that individuals and families have their financial lives in order. These 50 items serve as a checklist: Take a moment to really reflect on where you are financially in each of these critical areas and follow these guidelines if there’s room for improvement.

Get your overspending under control.

Whether your financial goals are to enjoy a happy retirement or buy a first home, sticking to a budget is the key to success. Overspending can be caused by the influence of advertisements or an effort to keep up with neighbors, and according to Elizabeth Dunn, professor at the University of British Columbia and chief science officer at Happy Money, addressing your tendency to overspend should be your first step in creating a financial strategy. “People often have a lot of stress and baggage around money,” she told U.S. News. “Before we start talking about interest rates, let’s deal with all of the feelings and stress and issues that might be swirling around.”

Create a budget for the new year.

It’s impossible to anticipate every expense that could arise in 2022, but a big-picture budget can help you prepare for costs that come up every year. Budget for that car repair or home repair you know is on the horizon, prepare for birthdays and holidays, and consider how your income might change throughout the year.

Download a budgeting app.

To budget for the long term, you need a system. Whether it’s a spreadsheet or a budgeting app, put a plan into place to maintain your budget throughout the year. Quicken and Mint both offer budgeting apps to manage bills, credit cards and saving.

Create a will.

If you haven’t already, creating a will is one important element of your estate plan that will ensure you and your finances are taken care of if anything should happen. A will can be particularly important for individuals with young dependents, as a will often serves as a formal way of naming your child’s legal guardian.

Protect your savings from inflation.

High rates of inflation continue to drive up the cost of essentials like gas and food, but could also be eating away at your savings. Learn more about what inflation is, how it starts and how the government attempts to control it, and what you can do to combat inflation. Options might include adjusting your investment portfolio or asking for a raise to keep up with rising costs.

Prepare for rising interest rates.

As this high inflationary environment continues, it’s likely the U.S. Federal Reserve will soon raise interest rates. Rising interest rates can affect families and individuals in different ways. Rising rates can, for example, result in higher mortgage payments for borrowers with a variable rate mortgage or push banks to offer better returns on savings accounts.

Consider starting a business.

Is it time for you strike out your own? Owning your own business can offer flexibility and freedom a typical job cannot, and 2022 may be your year to finally take the plunge. To execute your business plan well, take advantage of advice from business owners who have found success themselves: Lean on your community and partners, be mission-driven and be willing to adjust as things change.

Prepare for your next major life event.

Life events like marriage and parenthood come with major financial consequences. Couples planning a wedding shouldn’t just weigh the cost of venues but may also want to consider drafting a prenuptial agreement to protect their assets. Costs surrounding having a child include child care and saving for college, and new parents should begin to budget for parenthood by reviewing their options for paid family leave, speaking with a tax professional and getting their estate documents in order.

Get on track with your retirement savings.

Small increases in savings can lead to significant results when the magic of compound interest has time to do its thing. Consider bumping up your retirement savings rate 1% this year and compare your savings rate to benchmarks for your age range. If you’re not quite hitting your retirement savings goal yet, save what you can and consider ways to adjust your spending to accommodate a higher savings rate.

Get ready for tax season.

Discover how your tax bracket may have changed for the 2021 tax season and get your documents in order. There are seven tax rates for the 2021 tax season: 10%, 12%, 22%, 24%, 32%, 35% and 37%. Your tax rate can be calculated using your filing status and taxable income. Remote work — a status that applied to 51% of U.S. employees as of April 2021, according to a Gallup poll — may also have important tax implications to consider this year.

Consider investing in cryptocurrency.

It might not be the best fit for you, but it’s at least worth learning more about the world of crypto assets. Protecting your assets is just as important as selecting the best cryptocurrency to invest in. “If nobody knows you have it, it’s gone,” Nathaniel W. Birdsall, senior counsel at Proskauer Rose in New York, told U.S. News. “Somebody has to find those keys and know what they mean. It’s not good if your grandma cleans out your closet and finds that string of numbers on a piece of paper and doesn’t know what they are.”

Learn from the past.

A new year is a chance to have a fresh start with your finances. But to get closer to your money goals, take the time to reflect on the past year. Review your spending and saving, and make a plan to prepare for the future that considers the way events like the pandemic and the country’s recent bout of inflation will shape your plan going forward. Since the pandemic, for example, experts say consumers have found a renewed interest in maintaining an emergency fund and ensuring investments are diversified should the world face another crisis in the coming years.

Start saving for college with a 529 plan.

Opening a 529 plan is a great first step toward saving for your child’s college tuition. But these days, 529 plans can also be used to pay for K-12 private education, community college, technical training and even student loan debt repayment, so it’s never too early to start saving.

Make a plan to repay debts.

How you repay debt may depend on the type of debt you have. Some experts suggest high-interest debt like credit card debt should be prioritized, as this sort of debt is the most expensive. Others suggest a method that makes small payments on a range of debts to chip away at the total debt load. Either way, a budget can help manage debt repayment.

Pledge to ignore money fads.

Remaining knowledgeable and informed is incredibly valuable when it comes to managing money — but it’s possible to go too far. Avoid getting caught up in the latest money craze, whether it’s GameStop trading or tiny houses, and instead evaluate your options based on your unique set of needs and income limitations.

Designate a power of attorney.

Like a will, designating a power of attorney is another important estate planning document. It is perhaps even more powerful, as this designation allows another individual to act entirely on your behalf. While popular among older individuals, experts recommend all adults at least 18 years old set up a power of attorney to make financial, legal and sometimes health decisions on their behalf in case of an accident or other unexpected incident.

Give money to your children.

Gifting to children can be a wise move for tax reasons and simply for your enjoyment if executed properly. Consider creating a plan for lifetime gifting to your children instead of leaving your money to them in the form of an inheritance, but be sure to work with a professional if you plan to gift a significant amount to avoid undesirable tax implications.

Give money to charity.

If you’re not in the habit of charitable giving, consider starting now. The rate of charitable giving has declined in recent years, according to a study by the Indiana University’s Lilly Family School of Philanthropy, but giving can be rewarding personally and come tax season. Learn more about the charitable deductions available to you and research nonprofits carefully before gifting.

Find a new job.

Job seekers in 2022 may enjoy more job opportunities than in prior years as the current job market experiences a “Great Resignation.” However, take note that the situation is not the same everywhere; resumes should be customized and the interview process this year may look a little different than what you’re accustomed to. Also, it looks like remote work is here to stay — so don’t be afraid to ask for a remote option if it interests you.

Move out of your parents’ house.

If you’re still living at home or simply seeking a change of scenery, consider a move in 2022. With remote work more ubiquitous following the coronavirus pandemic, many workers have new flexibility to relocate and start anew. Before moving, check your credit report, create a budget and account for any overlooked costs associated with the move.

Fully fund your emergency account.

Experts typically recommend individuals maintain three to six months of expenses in a liquid, easily accessible emergency fund. This money can be used to cushion the blow of an unexpected job change, take care of repairs following a storm or cover any other necessary expense that could not have been foreseen.

Ask for a raise.

It may be time to ask for a raise if your work responsibilities have increased, you’ve received positive feedback from your employer or your cost of living has increased. First, determine how much of a raise to ask for. Next, perfect your approach for the best chance of success by collecting evidence of your performance.

Quit a job you hate.

Make a plan to leave a hated job this year. You might brush up on your interview skills, update your LinkedIn profile, update your resume and connect with mentors and friends to find a new job. If you’re ready to quit sooner rather than later, building up substantial savings can help you get through a few months of job hunting.

Switch to a credit card with better rewards.

Sign-up bonuses, rewards and cash back can be enticing. Sometimes they’re worth it — but not always. Research the best credit cards but review the fine print closely for possible fees. The average annual percentage rate for rewards credit cards is between 16.89% and 24.25%, according to U.S. News data — a rate slightly higher than the averages for credit cards generally.

Build your wealth.

There’s no magic formula to accumulating wealth, but there are a few tried and true strategies: Invest your money and stay invested, take advantage of employee benefits, borrow thoughtfully and monitor your spending. “The slow way is usually how it goes,” Dennis Nolte, certified financial planner and vice president at Seacoast Investment Services in Winter Park, Florida, told U.S. News. “Everybody wants to get rich quick, but for most of us, it’s a marathon.”

Calculate your net worth.

Know where you stand by calculating your net worth. Net worth is equal to assets minus liabilities. Assets include cash, stocks, bonds, cryptocurrency and real estate. Liabilities include any debts, such as a mortgage.

Protect yourself from identity theft.

Identity fraud resulted in $56 billion in losses in 2020, according to the 2021 Identity Fraud Study from Javelin Strategy & Research. Traditional identity fraud represents $13 billion of this — meaning consumers had no idea how their information was stolen. Take steps to prevent identity theft this year by freezing your credit, checking your mail daily and shredding documents that contain personal information.

Take advantage of a health savings account.

While not the best fit for everyone, an HSA can offer individuals and families the chance to invest in a tax-advantaged account reserved for certain qualified expenses. These include doctor bills, hospital stays and prescription drugs, as well as a handful of other items like over-the-counter medications and menstrual products.

Start a side hustle.

A side hustle can stretch a budget or lead to a better job down the road. Some websites offer opportunities for freelancers to make quick cash doing one-off gigs and projects. Individuals can also start their own business in addition to their full-time job or leverage social media sites like YouTube to create a following and monetize their content.

Take advantage of employer benefits.

You may be already enrolled in your company’s 401(k) plan, but in addition, closely review the other benefits for which you are eligible. Common benefits include life insurance, dental insurance, help with legal fees and commuter benefits. Open enrollment typically opens in the fall, but employees can typically change their election if a qualifying life event has occurred.

Automate bill payments.

Set up automatic bill pay on accounts like credit cards to ensure you never miss another payment. It’s still important to check in on those accounts regularly to avoid missing potential fraud or errors on statements, but automatic bill pay can help you avoid and pay down debt.

Cut the cable cord.

Cable is expensive, and today there are endless ways to stream your favorite shows without relying on a cable subscription. Try YouTube TV or Sling and streaming services like Netflix or Hulu instead. There are some low-cost streaming services out there, but be careful that you don’t cut the cord only to end up overpaying on multiple streaming platforms.

Automate your savings.

To meet your savings goals, set up an automatic sweep into a savings or investment account. Make it effortless to save and you’ll not only meet your goals — you could also end up spending less when you see less cash readily available in your checking account. To determine how much you should be saving each month, review saving benchmarks by age as a starting point.

Review your subscriptions.

Take a look at your credit card statements for the year looking closely for payments that appear monthly or annually, like subscriptions to a streaming service. Take the time to cancel any unused or unwanted subscriptions and reallocate those expenses in your budget to something you do use — or put the extra money toward any existing debt. To ease this process, consider using an app to manage your subscriptions in one simple place.

Find unclaimed money.

Organizations like banks, insurance companies and the U.S. Treasury all keep databases of unclaimed money. This money owed is often the result of a closed bank account from which the remaining balance was never withdrawn or a job change that resulted in retirement funds left behind. To see if money owed has your name on it, review these databases.

Find a better bank.

If your bank charges high fees, offers low interest rates or has simply become inconvenient, consider shopping around. Though changing banks can be complicated and come with implications for your credit score, executed properly, the pros can outweigh the cons. Open the new account, redirect automatic payments and direct deposits, and keep both accounts open for a while until you’re sure everything is up and running properly.

Practice talking about money with a partner.

Money and relationships are complicated separately, so mixing the two can present a significant challenge for spouses and partners. This year, try to learn more about your partner’s money habits, set the same financial goals and decide how and when to join accounts if you haven’t already. Possibly most importantly, start communicating regularly about money.

Ditch the fancy gym subscription.

If you didn’t already during the coronavirus pandemic, stop paying an expensive gym membership fee this year. Working out at home has never been easier or more engaging. Those who like group workouts can try systems like the Peloton, and those looking to create a home gym on a budget can get started with inexpensive equipment like resistance bands, kettle bells and a yoga mat.

Say goodbye to extreme money strategies.

Just like a crash diet, an extreme budget that requires consumers to drastically change their spending likely won’t last. Instead, try making small, sustainable financial changes like reducing spending 10% and seeking balance by spending selectively on things you truly need and enjoy. Support from family and friends can make budgeting more likely to work in the long run, so get your loved ones involved, too.

Learn to cook.

Dining out can add up in your budget. Save money on food by cooking at home instead of eating out and taking advantage of sales and smart grocery shopping strategies to stretch your budget this year.

Join a Buy Nothing Project group or shop secondhand.

Apart from being an environmentally sound decision, buying secondhand or borrowing from neighbors can be great for your budget. The Buy Nothing Project, for example, connects neighbors to share, give and borrow needed items without any exchange of money. Local thrift stores may offer clothing and other home goods at a significantly reduced price.

Read personal finance books.

These days, information about investing, saving and retirement is readily available online and at your local library. Personal finance books like “Your Money or Your Life” by Vicki Robin and Joe Dominguez, “The Bogleheads’ Guide to Investing” by Taylor Larimore, Mel Lindauer and Michael LeBoeuf, and “The Millionaire Next Door” by Thomas J. Stanley and William D. Danko are essentials for those new to money management.

Sell your unused items.

Start fresh this year by cleaning out your closets, basement and garage — and sell the unworn clothing, toys and technology gathering dust. Apps like Decluttr, eBay, Facebook Marketplace and Poshmark offer a platform to sell unwanted items that can make the process painless.

Subscribe to a money newsletter.

Financial management doesn’t happen overnight. Consistency is key, and a regular money newsletter like Your Money Decisions from U.S. News can be a great way to keep up with the latest financial trends and continue your positive personal finance habits for years to come.

Build a passive income stream.

Earning a passive income stream can offer a rare form of financial freedom. Owning real estate can offer a somewhat passive form of income, but you could also try renting out a room in your home or apartment and even renting out spaces like your driveway, backyard and storage space to generate a passive income. Another form of passive income: your retirement investments.

Try a money challenge.

To get through short periods where cash flow is tight, try a money challenge like the the 52-week savings challenge or the “keep the change” challenge. According to Nev Harris, a financial coach in Pittsburgh, people who struggle to save “mentally, they don’t see the benefit of finding that money by changing their current spending, and so they don’t start saving for the future because in their mind they feel it won’t amount to anything significant.” A money challenge can help.

Review your insurance coverage.

As your life changes, so, too, will your insurance needs. Life insurance, for example, comes in various forms and coverage terms that could be critical should something happen to a parent of a small child. Selecting the right health insurance for your needs can also have significant implications not just for the quality of your health care but also for your finances. Choose carefully and reevaluate regularly.

Take a personal finance course.

The online course options today are endless. Take a personal finance course on repaying debt, making smart investment decisions or simply managing a large family budget. Popular course options include Financial Peace University, Suze Orman’s Personal Finance Online Course, Brigham Young University’s personal finance courses and Udemy.com’s personal finance courses.

Define your money goals.

Money goals don’t have to revolve around achieving a certain net worth or salary — though those things may certainly be a means to an end. Your financial goals could include saving for a trip to Australia, buying a new car you’ve always wanted or finally paying off your mortgage to get some peace of mind. Whatever they are, set specific, actionable goals for your finances in 2022. Then describe how those goals will be achieved in clear steps.

Hire a financial advisor or tax pro.

If your financial situation has recently become more complex — maybe you’ve become self-employed, recently undergone a divorce or received a large inheritance — it may be time to hire a professional. Reach out to trusted friends, colleagues and business partners to get a referral for a certified financial planner, estate planning attorney or certified public accountant who can help you navigate your money management.

Follow these 50 steps to financial freedom.

— Get your overspending under control.

— Create a budget for the new year.

— Download a budgeting app.

— Consider investing in cryptocurrency.

— Create a will.

— Protect your savings from inflation.

— Prepare for rising interest rates.

— Consider starting a business.

— Prepare for your next major life event.

— Get on track with your retirement savings.

— Get ready for tax season.

— Learn from the past.

— Start saving for college with a 529 plan.

— Make a plan to repay debt.

— Start a new retirement fund.

— Pledge to ignore money fads.

— Designate a power of attorney.

— Give money to your children.

— Give money to charity.

— Find a new job.

— Move out of your parents’ house.

— Fully fund your emergency fund.

— Ask for a raise.

— Quit a hated job.

— Switch to a credit card with better rewards.

— Build your wealth.

— Calculate your net worth.

— Protect yourself from identity theft.

— Take advantage of a health savings account.

— Start a side hustle.

— Take advantage of employer benefits.

— Automate bill payments.

— Cut the cable cord.

— Automate your savings.

— Review your subscriptions.

— Find unclaimed money.

— Find a better bank.

— Practice talking about money with your partner.

— Ditch the fancy gym subscription.

— Say goodbye to extreme money strategies.

— Learn to cook.

— Join a Buy Nothing Project group or shop secondhand.

— Read personal finance books.

— Sell your unused items.

— Subscribe to a money newsletter.

— Build a passive income stream.

— Try a money challenge.

— Review your insurance coverage.

— Take a personal finance course.

— Define your money goals.

— Hire a financial advisor or tax pro.

More from U.S. News

How Much to Put Into a Health Savings Account

The Savings Rate Method of Retirement Planning

Should You Pay Off Credit Card Debt or Save Your Stimulus Check?

50 Ways to Improve Your Finances in 2022 originally appeared on usnews.com

Update 11/05/21: This story was published at an earlier date and has been updated with new information.

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