Set Financial Goals That Stick for 2022

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If there was ever a time to hire a financial adviser about recovering from holiday overspending, now would be it. As we all experience our own financial hangovers from 2021, we’re seeking to find the best ways to budget for 2022 while growing our savings and minimizing our spending. Managing our cash flow has become key to our budgeting plans. Some financial experts have been talking about these ideas already, so you’re not alone. Here are some tips on setting financial goals that stick in 2022.

1Stick to a Budget

Curb your spending, especially when it comes to items beyond necessities. Many financial advisers recommend that you review your spending habits at the end of each year (or really, each month) to see where and how you’re overspending. As one expert claims, it will help you become a smart spender in the future.

“Budgeting better and replenishing that emergency savings fund are becoming permanent habits for many,” says Stacey Watson, senior vice president of life event planning at Fidelity Investments. “Americans are connecting their new perspective on well-being to the way they approach their finances and, as a result, becoming more thoughtful about saving and spending.”

2Pay Off High-Interest Debt

If you have high-interest debt with a credit card company, that should be paid off before your low-interest student loans. Whatever has the highest interest should be paid off ASAP. That should be your No. 1 goal. As Jean Chatzky, a financial expert and founder of the HerMoney blog, explains, consumer debt hit an all-time high in the third quarter of 2021. “First, start by paying off your highest-rate debts first — they’re the ones that are costing you the most,” explains Chatzky. “Lay your credit cards out on the table and make a note of the interest rate you’re paying on each one. This will give you an idea of where you should be making your biggest effort. Lastly, if you think you need a little more help in paying off your debts, I encourage you to take a look at my newest get-out-of-debt tool, Debt Diet Online. It’s a personalized program that uses behavior-change science to guide you through your debt challenges.”

3Build Your Emergency Fund

Your emergency fund is there in case you lose your job, have a family emergency, or you have a medical problem that stops you from your ability to work. It should ideally be six months’ worth of your living expenses, if not more. As financial expert Rachel Cruze explains: “Make sure you’re not keeping your emergency fund in a place that’s too easy to access. My husband and I keep ours at a completely different bank than our other accounts to make sure we can’t just dip into it whenever we want. And it turns out we’re not alone! Our State of Personal Finance Study found that 63% of people who have an emergency fund keep it separate from their checking and savings accounts.”

4Double Your Income

Granted, this is easier said than done, but putting in the extra energy to start a side hustle to help double your income is worth the extra work outside your 9 to 5 job. It's about increasing your value by setting up passive income streams, whether it’s a self-automated online class or ebook sales, or setting up a side business managing wedding photography. “Take a skill or hobby in which you are highly skilled and build a business; you can do this on the side while keeping your full-time employment,” writes investor John Rampton. “Not only will you be making money doing something you enjoy, but your income will also rise as your customer base increases.”

5Review Your Net Worth

When it comes down to self-worth, it obviously goes beyond the numbers. But it’s good to check in and review your net worth at the end of each year. As a primer: Your net worth is the value of your assets (like cash, investments, real estate) minus your debts. Start by asking yourself how much your net worth changed over the past 12 months and how much you have put toward investments, like your retirement account or paid off debt.

“Your net worth is an important measurement because building wealth is a way to avoid fragility and the path to achieving financial freedom,” explains one bookkeeping agency founder, Paco de Leon, in a recent blog post. “When your net worth is high enough, the income stream from your wealth covers your expenses, and you no longer need to trade time for money. That is the holy grail of financial freedom. Even if you are far away from that point, having wealth is still important. It can make you feel secure and give you options, so you don’t feel trapped in a job or become financially stagnant.”

Tags: Budgeting, Finance, Money, Personal Finance, Saving Money

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Written By

Nadja Sayej

Nadja Sayej is journalist based in New York City writing about design, architecture and culture for Architectural Digest, Vanity Fair and Barron's, among others. See Full Bio

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