As we welcome the year 2022 (wow!), many of us also welcome the chance at a fresh start. Another trip around the sun brings another opportunity to reinvent ourselves and form healthy habits, especially those relating to money. With rising inflation rates and high unemployment rates, there is no better time to become financially savvy than the present. But best of all, little changes compound quickly and create big results. This year make finances a top priority. If you don't know where to start your financial education, let this list be your guide!
According to a survey by cnbc.com, over 49% of people polled voiced "save more" as one of their financial resolutions. Luckily there are plenty of ways to save more money in 2022.
Open a cashback credit card, or find a credit card that offers rewards that fit your lifestyle. If eating out is your biggest expense, and this isn't the year you learn to cook, find a credit card that offers 10x points at restaurants. Credit card rewards, when used responsibly, are one of the easiest ways to save money without implementing much change. If you are a responsible spender, do some credit card research (or read this article, comparing the top contenders) and pick a new card in 2022 that works for you.
Take the decision-making out of saving. A great way to get serious about your savings goals is to remove the option not to save. Set up a direct deposit from your checking account to your savings account. Schedule the deposits to line up with your paychecks and watch your savings account grow each month.
Whether you are looking to buy a house, get a loan, or apply for a new credit card, a good credit score is essential. A good credit score is the culmination of multiple factors, including your ability to pay your bills, the age of your credit, and your credit usage patterns. If you are looking to raise your credit score, you can take a few routes, like asking for credit limit increases and paying off your debt, to name a few.
Add An Authorized User to a Current Credit Card. Are you married? Does your spouse have a better credit score than you? Becoming an authorized user on a cardholder's account with great credit can significantly improve yours- and quickly too. Depending on how good the credit score of the primary user is, you have the potential to raise your credit score by 100 points in less than a year.
Again, this is for the financially responsible- but opening a new bank account is a great way to not only save money but build credit. According to Experian, the more accounts you have open, the better. But don't close old accounts when you are opening new ones. The lifespan of each account is taken into account when your credit score is being determined. The older the age of each account, the better.
A no-spend week is an easy way to make a serious dent in your savings goals. It is also a fun way to test out your creativity. What activities do you find yourself picking up when you can't go out to dinner, go to a movie or go shopping? Do you pick up a puzzle, read a book, pursue a hobby? Try a no-spend week where you focus on dry foods you already have, and vow not to make a purchase for a few days. If a week feels a bit ambitious, try a no-spend weekend!
Do you have a low credit limit that you max out every time? Chances are, this is negatively affecting your credit score. Ideally, you want to keep your credit usage around 6%, meaning you might want to ask your bank for a credit limit increase. This may ding your score a point or two up front, but the long-term benefits of low usage far outweigh the initial point decrease. If your first credit limit is increased, get in the habit of asking for a credit limit raise every six months.
Popularized by Senator Elizabeth Warren, the 50-20-30 Budget rule says that 50% of your budget should be spent on essentials, 20% should be saved, and the remaining 30% can be spent on wants. If you don't know where to start, this is a solid framework for building wealth and reasonable guidelines to adhere to. Allocating a certain amount of funds to saving, spending, and fun take the questions out of saving.
In the case of budgeting, ignorance may be bliss but it will not help you reach your savings goals. Tracking your money and creating a budget has never been easier, now that the days of spreadsheet budgets are over. There are dozens of apps in the app store that connect to your bank account and tell you exactly where your money is going. Once you know where it is going, you can plan accordingly. Do you spend $200 per month on streaming services but only watch TV once or twice a week? It might be time to reevaluate.
Knowing how much to save is hard, especially when social media makes it look like no one is saving. The truth is, less than 51% of Americans have three months' worth of expenses saved up. However, 60% of Americans consider themselves savers. Start considering yourself a saver this year and get ahead of the competition by savings six months of expenses.
Reaching your financial goals doesn't have to be complicated. Get a jump start on your dreams with our Financial New Years' resolution checklist.