The holidays are over and it’s time to make some changes to improve your finances in the coming year. And today on MoneyWise, we have a list of tips to get you started.
MONEY TIPS FOR 2022
1. MAKE A SPENDING PLAN: First, take a good look at your budget and make any necessary changes for the coming year. You will need to account for rising inflation on everything from fuel to electronics to groceries. You may need to cut spending in other areas, like entertainment, to compensate for those cost increases.
The MoneyWise App is a powerful budgeting tool with three different ways to choose from for budgeting your money.
2. SET UP AN EMERGENCY FUND: Another important step to improve your finances is to finally set up your emergency fund. Your emergency fund helps you stay out of debt when you’re hit with the unexpected.
Open a savings account at an online bank and have something out of every paycheck automatically transferred to it. Cut discretionary spending to give yourself margin. Set a goal to save $1500.
Your next emergency fund goal is to save one month’s living expenses. Then three months. Ideally, keep going until you have six months’ expenses saved up. You may not get there this year, but don’t worry about that. Just get started!
3. MAKE A GIVING PLAN: As you tweak your budget, one area you definitely don’t want to cut back on is giving to your local church. Make a plan for how much you intend to give this year. Remember, the tithe is just the “training wheels” for giving. Prayerfully consider giving more than last year.
4. MAKE A WILL: Make this the year you finally draw up a will. Save your loved ones the unnecessary trauma of having the probate court decide how your estate is settled should something happen to you. This is critical if you have young dependents because a will gives you the opportunity to name a legal guardian.
5. PREPARE FOR RISING INTEREST RATES: With inflation back, the Federal Reserve is planning to raise interest rates soon. If you’re unfortunate enough to have a variable rate mortgage, start planning for higher monthly payments. The same is true if you have a home equity line of credit.
It also means that interest rates are likely to rise on consumer debt, like credit cards. If you have credit card debt, make a plan now to pay it off as soon as possible.
6. CONSIDER INCREASING RETIREMENT CONTRIBUTIONS: Next, consider bumping up your retirement contributions if you’re not on track to reach your goals. Take advantage of any employer matching funds to your 401k. You can contribute up to $20,500 to your 401k in 2022.
If you don’t have a 401k at work, set up a Roth IRA. You can contribute up to $6,000 in 2022 or $7,000 if you're 50 or older.
7. GET READY FOR TAX SEASON: The last year saw major changes in work settings due to COVID. If you work from home, you may be eligible for more deductions. Working from home means you can deduct a portion of your home expenses if you meet the requirements.
If you’re used to doing your own taxes, with or without a computer program, particularly if you’re working as a 1099 contractor, this might be one year to take your taxes to a professional because things get a lot more complicated. You don’t want to miss any deductions.
On today’s program, Rob also answers listener questions:
● What should a widow do with her spouse’s pension?
● How can you continue to save for emergencies when money is tight?
● Is there a way to unload an unwanted timeshare?
● When does it make sense to pull money out of an annuity?
RESOURCES MENTIONED DURING THIS PROGRAM
Remember, you can call in to ask your questions most days at (800) 525-7000 or email them to Questions@MoneyWise.org. Also, visit our website at MoneyWise.org where you can connect with a MoneyWise Coach, join the MoneyWise Community, and even download the free MoneyWise app.
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