How to Tackle Your Financial To-Do List for 2022
We're sure you're still writing 2021 on checks but it's time to turn the page and make sure we take some steps to improve your finances.
There’s a reason we all want to get organized in January. After a month of indulgent food and drink, festive decorations in every nook and cranny, and plenty of social obligations keeping us busy, it feels good to stay home and get our ducks in a row. Not to mention, we do quite a bit of spending during the holidays. Which is why there is no time better than right now to take stock of your finances and make progress towards your financial goals.
Let’s take a look at how you can tackle your annual and monthly financial to-do list.
Let’s get some of the big to-do’s out of the way so you can start the year on the right financial foot.
Create a new budget. Sit down and pull out all those old bank and credit card statements from the last year and do some detective work to figure out exactly where your money went in 2021. Take note of your necessary expenses such as mortgage payments and food. Once you know exactly how much you need to spend each month, you can calculate how much you can afford to put towards fun spending like travel and financial goals like saving for retirement. See where you can cut unnecessary spending so that you can put more towards your financial goals each month.
Make a debt repayment plan. If you have debt, add room into your budget for your monthly minimum debt payments. To save as much as possible on interest payments, make a plan to pay extra money each month towards your highest interest source of debt. Once you fully pay that source of debt off, you can tackle the next highest interest debt. Keep making all of your minimum payments while you do this and work your way down the list until you’re debt-free.
Check-in on your retirement plan. Even if you have an automatic monthly retirement contributions setup, the new year is a good time to touch base with your retirement plan. Once you finish creating your budget, you’ll see if you can afford to increase your contributions. Make sure you check out this year’s new contribution limits before you refresh your savings plan. If you didn’t contribute as much as you would have liked last year, you can still max out your 2021 IRA contributions until April 15th, 2022 and if you have an employer-sponsored 401(k), make a plan to meet the employer match limit this year.
Review your credit report. Typically, you can review your credit report from each of the three major credit bureaus (Experian, TransUnion, and Equifax) once a year for free. To help consumers navigate these financially uncertain times, you can actually request to see a copy of your credit report for free weekly from each bureau until April 20th, 2022. It’s important to review your credit report at least once a year to check for any errors you need to dispute, signs of identity theft, and areas of concern you can work on improving.
Adjust your tax withholding. It’s easy to forget to adjust your tax withholding if you’re remaining at the same job this year. If you experienced a major life event such as getting married or divorced, having a child, or buying a home, redo your W-4, so you’re withholding enough from each paycheck. If you hire an accountant to help you file your taxes, make your appointment now and start to collect any documentation you need to bring to your appointment so you can have a stress-free tax season.
Creating financial plans for the year is a great step towards meeting your financial goals. To keep the momentum going, check in on your finances each month.
Review your budget. At the end of each month, take a look at your spending and how you can adjust your budget to meet your needs. Where did you overspend or underspend? What unnecessary expenses can you cut? How can you make more room in your budget to work towards your financial goals like saving for a home?
Check-in on your debt repayment plan. The same goes for your debt repayment plan. Paying off debt is more motivating when you see progress being made. Take note of how much debt you owe each month, make sure you didn’t forget to make any payments, and see if you have any money left over in your budget to make extra debt payments.
Double-check your bank and credit card statements. Identity and credit card theft happens when you least expect it. Review your bank and credit card statements each month to make sure you actually made each purchase listed and keep an eye out for any bad spending habits you can cut next month.
Want help getting your financial life in order? Connect with us to see how we can support you!