{"id":2420,"date":"2022-01-12T16:55:13","date_gmt":"2022-01-12T20:55:13","guid":{"rendered":"https:\/\/www.skypointfcu.com\/wph\/workarea\/?p=2420"},"modified":"2022-01-12T16:55:25","modified_gmt":"2022-01-12T20:55:25","slug":"5-steps-to-reach-your-money-goals-in-2022","status":"publish","type":"post","link":"https:\/\/www.skypointfcu.com\/wph\/workarea\/blog\/5-steps-to-reach-your-money-goals-in-2022\/","title":{"rendered":"5 Steps to Reach Your Money Goals in 2022"},"content":{"rendered":"\n

In addition to the new year bringing confetti and a fresh calendar, it\u2019s a time to set big money goals for the next 12 months. That might mean finally paying off debt, buying a house or taking a long-delayed vacation.<\/p>\n\n\n\n

With inflation and economic uncertainty clouding 2022, shoring up your finances this month can feel even more urgent.<\/p>\n\n\n\n

\u201cWhen you plan to start in the new year or some other important date for you, it can be easier to make that behavioral change, because we feel like we\u2019re making a fresh start,\u201d says Jeremy Burke, a senior economist at the University of Southern California\u2019s Center for Economic and Social Research.<\/p>\n\n\n\n

Here are five steps money experts recommend to help you reach your money goals<\/a> in 2022:<\/p>\n\n\n\n

1. Get a clear view of your finances<\/strong><\/p>\n\n\n\n

\u201cThe first step for everybody is to get organized,\u201d says Phuong Luong, a certified financial planner at Saltbox Financial in Massachusetts. That means making a list of your savings, debt and assets. A complete picture of your finances can help you decide what to focus on for the new year, she says, and provide a document that\u2019s easy to update annually.<\/p>\n\n\n\n

Luong also suggests tracking your monthly cash flow<\/a> with a spreadsheet or app to help you answer questions about what mortgage payment you could afford or which expenses you might be able to cut. \u201cIf you have those numbers organized, it\u2019s easier to have those conversations, with a professional or with yourself, about what you can actually afford,\u201d she says.<\/p>\n\n\n\n

A complete self-assessment includes reflecting on your values, which may have shifted during the pandemic. \u201cFigure out what is really important to you. Maybe you don\u2019t want to spend as much on clothes, or you\u2019d like to help more charities. Maybe instead of a car, you\u2019d like a nice desk and chair. It\u2019s easier to follow your budget when it\u2019s aligned with your values,\u201d says Shari Greco Reiches, a wealth manager in Illinois and author of the book \u201cMaximize Your Return on Life.\u201d<\/p>\n\n\n\n

2. Take baby steps with your emergency fund<\/strong><\/p>\n\n\n\n

Emergency funds<\/a> offer flexibility and comfort should you face unexpected expenses, but building one can be tricky. Behavioral economics suggests starting small, Burke says.<\/p>\n\n\n\n

\u201cInstead of setting a goal of saving $400 a month, it could be better to save $100 a week or an even smaller amount daily. There seems to be less friction to getting started when the time period is smaller so it\u2019s pennies per day instead of dollars per month,\u201d Burke suggests.<\/p>\n\n\n\n

That means if you have a goal to save $1,000 by the end of the year, increase your chances of success by thinking of it as saving $2.75 a day.<\/p>\n\n\n\n

3. Automate longer-term savings<\/strong><\/p>\n\n\n\n

Another lesson from behavioral economics, Burke says, is to set up automatic transfers into your savings each month. \u201cIn terms of improving long-term outcomes, it\u2019s really helpful to have things automated as much as possible,\u201d he says.<\/p>\n\n\n\n

For example, if you contribute to a retirement account directly from your paycheck, you have to set it up only once, and your savings will continue to be deducted. You can also sign up to automatically increase the percentage you are saving each year or each time you get a salary increase, Burke adds. You could set up similar automatic transfers into a college savings account or a high-yield savings account for other goals like saving for a down payment.<\/p>\n\n\n\n

4. Pay off the debt with the lowest balances<\/strong><\/p>\n\n\n\n

For Americans hoping to pay off high-interest debt this year, David Gal, professor of marketing at the University of Illinois Chicago, says his research shows that consumers are more successful if they start by focusing on the smallest balances first, called the debt snowball method<\/a>. \u201cThat gives the perception of success and progress, and increases the motivation to pay off the bigger accounts,\u201d he says.<\/p>\n\n\n\n

Daphne Jordan, a CFP and wealth adviser in Texas, emphasizes the importance of staying positive. \u201cThink about where you want to go in this new chapter of life,\u201d she suggests. \u201cDon\u2019t see your financial past as a mistake. Everything is a learning experience.\u201d<\/p>\n\n\n\n

Having an accountability partner to check in with can also help keep you on track, says Rianka Dorsainvil, a CFP in Maryland and co-CEO of 2050 Wealth Partners, a financial planning firm. \u201cLike with fitness, if we can count on one person checking in on us, we\u2019re more likely to be successful.\u201d<\/p>\n\n\n\n

5. Plan for some fun, too<\/strong><\/p>\n\n\n\n

Budgeting for 2022 doesn\u2019t have to be a downer: You can also fit in some fun spending plans, which might include reconnecting with friends and family. \u201cIf you want to take a trip in August, think about the cost of the plane ticket, hotel and food,\u201d Dorsainvil says. If it totals $3,000, then aim to start saving $375 a month through August.<\/p>\n\n\n\n

That way, she says, \u201cYou\u2019re being realistic and setting measurable goals\u201d \u2014 two approaches that increase your chances of success.<\/p>\n\n\n\n

This article was written by NerdWallet and was originally published by the Associated Press.<\/em><\/p>\n\n\n\n

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