With the new year dawning, it’s time to reflect on the past year and make resolutions the following year. Whether you plan to start eating healthy, read more books or change unhealthy financial habits, now’s the best time to change old habits and look for ways to improve.
Here are some simple steps that will tell you how to save money fast and get your finances in order in 2022.
1. Find Unnecessary Spending
Have you ever wondered to yourself, “where’s it all going?”. If you answered yes, it’s time to comb through your bank statements and find out. Perhaps you have bad money habits, and they might be the only thing keeping you from reaching your financial goals and living paycheck to paycheck. Yes, shopping does feel good, but unfortunately, what feels good isn’t necessarily good for your financial health. Hence keeping tabs on your frivolous overspending should be the first step towards your financial strategy.
Keep a budget journal and track all of your unnecessary spending for the last three months. Start by cutting down on the least important ones. Consider how much money you’d save, and the best part is that you’d be able to contribute the funds to your financial goals.
2. Calculate your Retirement
Do you think you have plenty of time to save before retirement? Think again. The earlier you start preparing, the better it is. And it doesn’t matter how much time you still have before you retire. Getting a clear picture of how much corpus you need to stash away will help you save accordingly for your post-retirement phase.
Having said that, this might be different for everyone, depending on several factors such as your income, lifestyle, family size, health, social security payment, etc. For a general calculation, you can head over to Nerd Wallet to get an idea of where you are at and where you want to be!
3. Meet with a Financial Therapist
How’s your relationship with money? If it’s not something you’re proud of, it’s worth getting help from a financial therapist. By combining mental therapy with financial planning services, these professionals can help you address your financial woes and dig deeper into what’s causing you to live hand to mouth.
They also help you devise comprehensive plans for financial goals like savings, retirement, investments, etc. If you are looking for where to start, try out Financial Gym!
4. Prepare for the Coming Year
While it’s not practically possible to predict every expense that can come up in the next 12 months, a bird’s-eye view of your budget can help you prepare for the coming year. Maybe your car needs a repair, and you plan to renovate your house or that yearly birthday dinner ritual that’s bound to happen. Also, consider whether your earnings are likely to fluctuate over the year.
5. Prepare for Major Life Events
Major life events like marriage, starting a family, dealing with an illness or injury not only cause deep emotional shifts but also take a toll on your financial health.
Besides planning their weddings, couples should also draft an agreement to protect their assets. When it comes to preparing for a family, start with talking to your tax professional and getting your estate documents in order, your child’s education, and healthcare, among other expenses. However, new parents should review their paid leave policies, birthing expenses, baby necessities, immunizations, to name a few things.
6. Learn about Cryptocurrency
Look, no one’s telling you to throw all your savings into cryptocurrency, but currently, it’s the most promising market out there. Allow yourself plenty of time to learn the tricks of the trade from someone who’s been a pro and is making good money off it. This is important since crypto is still a relatively new, decentralized, growing space for investors. And only invest as much money as you can happily afford to lose.
Despite being a highly volatile asset, cryptocurrency favors long-term investors. Hence, the key is to diversify your portfolio and focus on investing in the long term.
7. Make the Most of your Money
Do you know where you spent most of your hard-earned money last year? Are you happy with how you spent it?
If yes, your money is in good hands. But if not, why not make changes for the upcoming year? Whether you need to be mindful of certain brand names, opt for local shops instead of big chains, or eat out less. Remember if you want to save money fast, you must make your money count.
8. Learn from the Past
A new year is the best opportunity to start with a clean slate. But if you don’t want to commit the same old money mistakes and take a step forward towards your financial goals this year, take time to reflect.
Review your expenses, unnecessary spending, and how much you saved, and make a plan for the future. Keep unprecedented scenarios in mind like inflation, the pandemic, and how they can affect your plan going forward. For instance, in the aftermath of the epidemic, people are now more focused on their emergency funds and diversifying their investments in case the world goes through another crisis in the future.
9. Utilize Money-Saving Apps
Money management can be a task. But the good news is that now you can track your spending, automate your savings, and even invest on the go. Just download mobile apps like Stash, Mint, or Emma and link them to your bank accounts.
Most apps are free and also offer some amazing deals and offer to help you save more on your monthly expenses.
10. Be Careful with Trading Apps
Investments are always a good idea. But be careful with where you invest and stay away from the gamification of financial apps. While stock picking and seeing where the market goes every day can be fun, it doesn’t guarantee wealth generation.
However, if you want to utilize trading apps or invest in highly volatile assets, ensure you have a large enough emergency fund in an FDIC-insured savings account.
Bottom Line
Although financial stress can take a toll on your mental wellbeing, it’s alright if the previous year didn’t go as expected for your finances. With the new year approaching, you can flip a new calendar, set new goals, and start anew. We hope with these simple steps now you know how to save money fast and improve your finances in 2022.
