4 Methods to Better Manage Money in 2022
Managing money can feel overwhelming, especially when dealing with inflation. The start of 2022 is the best time to look at finances. Let 2022 be the year you take charge of your finances, starting with making a financial plan.
Below, we share four methods to start your financial plan and set your finances up for a prosperous year.
Evaluate your financial situation
Evaluating your methods of managing money is the first step towards a solid financial plan. This begins with getting an idea of the amount you have coming in and going out every month. We suggest making a rundown of your income and expenses to get an overall view of how you’re spending your money. Including:
- All income (including your day job and any part-time or side gig work)
- Rent/mortgage payments
- Car payments/costs
- Food expenses
- Entertainment expenses
Decide on financial goals
What are your financial goals for 2022? Do you aim to build up your emergency savings? Or perhaps you want to put more money into your 401k. Put your goals on paper to get an idea of where you need to focus. To avoid getting overwhelmed, try sticking to two or three main goals.
Make a manageable budget
Once your financial goals are listed, you can create your financial plan and budget. This should consider your usual month-to-month expenses (like rent/housing expenses and car or transportation expenses) as well as expenses such as entertainment and groceries.
One method of budgeting to consider is the 50/30/20 rule. The 50/30/20 rule considers your present necessities and long-haul objectives. This is what your 50/30/20 rule budget breakdown should resemble:
50% will be designated to needs (recurring expenses)
30% will be assigned to wants (for example, home items you want but may not need)
20% will be allotted to monetary objectives (think retirement funds and emergency cash reserves)
Taking a strategic approach to budgeting can help you decrease unnecessary spending and stick to your planned budget.
Automating the process of saving can help remove the guesswork. You can do this by setting up a recurring bank transfer to your savings or an account such as your 401k.
Moving the cash into different savings accounts naturally will guarantee that you’re paying yourself first and not overspending. If you’re in a financial emergency, having crisis investment funds set up will permit you to deal with the costs all the more effectively without forfeiting your regular income during the process.
Getting another year going on the right foot is tied to defining attainable goals and achieving them. With a clear plan set up and the proper budget, you can feel certain about your financial plan for the forthcoming year.