Being “good with money” is about more than making sure your bills are paid. It’s about understanding your relationship with money and being curious about how to better manage your finances now and in the future. If having a better relationship with your money is on your “to-do” list for 2022, read on for a few tips that will help you get there.
Create a Budget
Having a clear picture of your monthly spending in relation to your income is worth the effort. Try tracking your spending for 30 days so you can identify where all the discretionary income is going and identify areas where you may be overspending unintentionally. Based on your findings, build a budget as a “control panel” for managing spending, reducing debt, and saving for goals going forward.
Rather than saving what’s left over after paying bills and spending, save first. Set up automatic, periodic transfers from checking to savings to establish a “forced saving” habit.
Have Emergency Savings Set Aside
You want to have cash reserve to tap into the event of a job loss, high medical expenses, or some other financial hardship. Work toward having an emergency savings fund worth at least three to six months of basic living.
Save for Retirement
Your employer-sponsored retirement savings plan is one of your most important benefits. Be sure you’re contributing at least enough to the plan to get the full amount of any match your employer may offer. Check in on the plan at least once annually to review your investment mix or possibly increase your contributions.
Tap Into Your Financial Curiosity
Think about spending some time each week to learn about financial topics of interest to you. Talk with friends or family, listen to financial podcasts, or follow financial experts.
Limit Credit Card and Online Purchases
If you’re a spender, credit cards and online shopping are constant temptations. Try resisting the urge to splurge for a month or two and see the improvement in your finances.
Get Help from a Pro
Having open and honest conversations with a financial professional who understands your needs and goals is a great way to put a plan in motion, stay on track and remain focused on your financial wellness.