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6 Ways to Stay Financially Fit in 2022 Thumbnail

6 Ways to Stay Financially Fit in 2022

The new year is here, and your resolutions are probably well underway. While you may set goals to get more physically fit, it is also important to consider your financial fitness going into the new year. We aren’t a huge fan of resolutions because they often fail. 

Instead, let’s focus on building solid financial habits. If your personal finances are not where you want them to be, consider the tips below to help get your finances in shape.

1. Trim the Fat

One of the first steps toward a healthier financial future is spending less. Most of us know this intuitively. However, budgeting can be hard for some of us. If you take the time to look hard at your budget, odds are you can find some excess that you can easily trim off without feeling a pinch. 

Start with your non-essentials, such as subscriptions services and takeout. Have you seen these food prices lately?? Do you really need extra movie channels and data? When was the last time you shopped around to compare prices?  

Next, delve into spending items such as clothing, groceries, and entertainment. Could we be smarter shopping or more date nights at home?  Cutting back on the nights out can help free up some extra money each month. Then, look at your utility bills and find ways to reduce them if possible. Finally, discipline yourself to follow good energy-saving tips to reduce the overall cost of your energy bills.

2. Tone Up Your Debt

For many Americans, the holidays can increase your credit card bills. Do not let that debt snowball higher than it needs to by allowing it to accrue interest. There are various methods to paying off credit card debt, but here’s one we like—

Start with your highest interest rate card, and set a larger payment in your budget to begin lessening that total. Once it is paid off, use that same payment to start tackling your next high-interest debt, and so on. A critical part to remember is that when paying only your minimum payment, it will take you 10 years and a significant amount of interest to pay off your card, so always pay more than the minimum if you are looking to pay off debt.

3. Whip Your Credit into Shape

Your credit score can affect many aspects of your financial life. Man, how we wish they focused on this more in K-12 education! Sadly, financial literacy can be lacking in public education. 

Whether you are looking to buy a house or car or to take out a loan to start a business, your credit score will be used to determine how much interest you will pay and how likely you are to even get those funds. Unfortunately, many people neglect their scores until they need them, and at that point, it can be difficult to improve quickly. Keep your credit card balance far from the limits, be sure to make payments on time, and monitor your score for negative marks. 

4. Load Up on Savings

Once you have trimmed the fat off your budget, you will want to put some of that into savings. Building a savings account will do 3 things:  

  • You will prove to yourself that you CAN save.
  • You will build up a cash reserve to help you buffer against emergencies.
  • Having a cash buffer can do wonders for your peace of mind.  

5. Put Retirement Savings in Your Routine

Saving for your retirement is critical to your future. Many people do not save enough for their retirement or wait so long that they stress their budget to meet their goals. Make it a point this year to focus on your retirement goals and find extra funds that you can put into your account so that it has the necessary time to grow as it should. 

There are many ways to begin preparing for retirement. We highly recommend talking with a financial advisor that specializes in retirement planning. Even if you think you are decades away from an actual retirement, we think you can benefit greatly from knowing more about what retirement may be like. 

Find out if your company offers a 401(k) with matching contributions, and if so, try to put in as close to the amount they will match as possible. This should be a minimal level of saving. We encourage saving and investing as much of your excess as you can. 

How much, you ask? This is why we recommend you talking with a financial advisor.  

6. Start a New Investing Routine

Investing can be one of the quickest ways to grow your wealth, but many people are afraid to enter the world of investing because they are afraid of losing money. Others are under the misconception that you must invest a lot of money when the truth is that you can begin your investment journey with as little as $100. Start small so you can get the hang of it, and if you have more money to invest, consider meeting with a financial advisor who can help you pick a mix of funds based on your risk tolerance.

Get your finances healthy this year and set attainable goals to help you grow your wealth and get started toward a secure financial future. 

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.