The past two years haven’t been easy. If nothing else, it’s reminded us that preparing for the unexpected is a crucial part of any financial plan. Use these tips to get 2022 started on the right foot.
Plan for the Little Things
The start of the year is the perfect time to reassess your budget and make new financial goals for yourself. Get started with a simple budget building session and make a list of your needs and wants for the new year. Take note of all your normal expenses, big and small, that will take away from what you’re earning each month. To save on those expenses, try and find ways to innovate your current spending habits—switch up where you shop and save on groceries or buy a coffee maker and commit to drinking coffee at home most mornings.
Save for the Big Things
Once you have your budget and know what you’ll have left over each month, choose a few savings goals to work towards. We recommend creating separate savings accounts for each goal. If you spent more than you expected on Christmas this year, go ahead and create an account for next year that you can slowly add to with the extra money you have each month. If you’d like to take a family vacation this summer, buy or renovate a home, or buy a new car, you can also create accounts for those goals. Calculate how much you’ll need and when, and then determine how much you’ll need to put aside each month to achieve that goal.
Prepare for Tax Season
Surprisingly, it’s not too early to begin thinking about your tax return. The IRS will post the official start date in early January, and you can start the process as soon as you receive your W2 forms. In fact, you can plan for the best time to submit your return depending on your annual financial plan. For instance, if you know you’ll have money coming in from your return, you can submit your taxes via electronic file in late January, and possibly have your return by February. If you plan to owe money after filing, you can wait until the official deadline to file so that you can free up money in the first quarter of the year and plan for the expense.
Have a Plan B
Many of us have a retirement plan in place. Some are chugging along until 67, and some are headed out early at 60. Whenever your time, even the best-laid plans can go awry. Because of the pandemic, many Americans had to retire earlier than scheduled due to layoffs, downsizing or health problems. The lesson learned—save like you’re retiring earlier than you plan to. If you go out on your own terms, you have extra saved, and if you don’t, that padding may come in handy.
Though we don’t know what 2022 holds, we do know that preparation is key to a successful financial year. Get ready for a new year and make your plan now for a brighter 2022.