Seven simple strategies to improve your finances in 2022 [Financial Resolutions]

At the end of the year, many of us start to think about what we want to accomplish in the next year and in the long term. For some, it’s about committing to a healthier diet, exercising more, spending more time with family, having more adventures, or saving more in the future.

There are simple strategies for thinking about planning financial resolutions. Here are seven ways to do it.

1. Save more for retirement

If you’re already saving for retirement, try increasing the amount you set aside each month. If you are not yet recording, now is the time to start. If your business has a 401 (k) plan, this is a great way to save money. Your money will be automatically withdrawn from your account before you get paid. This “forced savings plan” structures your retirement plan. A Roth IRA is also a great way to save for those who don’t have a 401 (k) plan or want to add current savings methods. Using after-tax dollars to fund a Roth IRA allows the money to grow until retirement with no taxes owed when you start withdrawing your savings after 59 and a half years.

2. Pay off credit card debt

Your goal should be to pay off credit card debt each month, as they have the highest interest rates of most consumer loans. Remember to always pay more than the minimum required and not to take on more debt while you are still paying off your current card (s). If you owe more than one credit card, pay off the one with the highest interest rate first, then pour your money into the card with the highest interest rate until all of your debt. be paid.

3. Create an emergency fund

If you don’t have emergency funds, set a 2022 goal to start creating one. You should aim to have about six months of spending in a savings account to get you through a few “rainy days.” The economy is more precarious than usual right now, so building towards this goal can give you peace of mind if the unexpected happens.

4. Review your insurance

Insurance is a big but necessary expense in our lives – home, auto, health, life and perhaps disability insurance. Now is the time to make sure you are not overinsured or underinsured. Can you save money by bundling your home and auto insurance with one insurer? Is your health plan right for you based on your age and current health? Do you have enough life insurance for your spouse and children in the event of a tragedy?

5. Evaluate your income and finances

Besides saving more and spending less, trying to increase your income is also beneficial. Finding a better paying job, finding a job with better benefits, reducing or eliminating travel costs, or moving to an area with lower cost of living can all have a negative impact. substantial positive impact on your finances. Seek to generate alternative sources of income, such as self-employment, ancillary activities, and passive income (real estate rentals and / or dividend-paying stocks) to create financial flexibility.

6. Improve your credit score

Check your credit report for errors, pay your bills on time, and keep your “credit usage” below 30%. Credit usage is the amount of debt owing on your revolving sources of credit, such as credit cards or home equity lines of credit, as a percentage of your available credit. Also, open a credit card if you don’t have one but use it wisely. By sticking to this plan, your credit score should improve over time.

7. Improve your physical condition

Physical health can lead to financial health. Money and the economy are one of the biggest sources of stress at almost all income levels. Making small, effective changes to eat better (cooking at home is healthier and cheaper), increasing exercise, and focusing on what is important can lead to feeling better and making smarter financial decisions in the long run. .

The key is consistency. By sticking to these seven simple strategies, you should be financially successful over time.

Raymond J. McCaffrey, CFA, has over 30 years of investment experience managing institutional accounts, mutual funds and high net worth accounts. He is CIO and Managing Director of Cypress Capital Management, a subsidiary of WSFS. McCaffrey graduated, with Distinction, from Villanova University in 1985 with a BS in Economics. He received an MBA with a concentration in Finance in 1987 from the Tepper School of Business at Carnegie Mellon University. He is a Chartered Financial Analyst (CFA).

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