Year’s end is usually a time where many people put their lives into perspective. But 2021 has come and gone, and we are now well into 2022.
Whether a New Year’s resolution or a life goal, achieving financial freedom is one of the most important for many people. Unfortunately, many people fail to achieve it. Whether you want to achieve financial freedom or get out of debt, it all starts with forming good financial habits — and (perhaps more importantly) getting rid of the bad ones.
It can take a lot of time and practice to develop good financial habits, but the benefits of being responsible with your spending are well worth the effort. In order to protect your hard-earned money and achieve the financial future you want, you need to be able to identify any bad financial habits you may have and understand how they are hurting you and how you can replace them with good financial habits that will serve your needs.
It is okay to make financial mistakes, everyone makes mistakes… What is not okay is allowing those mistakes to turn into ongoing bad habits. Fortunately, there is no better time than now to consider taking the following actions to start this year off on the right financial footing…
DON’T BE AFRAID TO LOOK AT YOUR FINANCIAL SITUATION DEAD ON
"Fear of the unknown holds many people back from taking the first step towards financial wellness," says New York-based CFP® Tom Henske. Having a plan for your money is arguably one of the best financial decisions you'll ever make.
But just having a financial plan isn't enough. Just as important is making sure you're reviewing and updating your plan regularly. Additionally, it is important to update your plan anytime you have a life-changing event such as buying a new home, getting married, getting a new job, or having a baby.
MAKE THE MOST OF YOUR RETIREMENT SAVINGS
One bad financial habit some people get into is treating retirement like an afterthought. People set up their retirement account and start making contributions to it without even knowing if it is going to be enough, or if they're taking full advantage of their contributions. If you're saving for a comfortable retirement, don't just set it and forget it.
If you participate in an employer-sponsored plan with matching contributions, you should definitely try to max out your contributions. If you can't, at least try to contribute enough to get the full company match. "That's free money," added Winnie Sun, co-founder and managing director of Irvine, California-based Sun Group Wealth Partners. "Don't leave it on the table."
You can find the maximum contribution limits for 2022 HERE.
REVIEW YOUR BUDGET, AND MAKE ADJUSTMENTS IF NECESSARY
Do you know how your spending looked this past year? Look at your credit card and bank statements to track your expenses and see where you can adjust for the year ahead.
Are you someone who stops off on the way to work and spends $6 on a coffee in the morning? Let's think about it in broader terms… That $6 coffee represents $30 per week in added expenses, which becomes $1,560 per year in money lost. If you would just bring a coffee from home, you could save $1,560 per year and apply that money towards other bills.
Also, take a look at the services that you currently have and get rid of any service that is redundant. Do you have a cellular phone and a landline home phone? Do you pay for cable television channels and streaming movie services through your Internet provider? Paring down these services to only what you need can save you a lot of money in the long run.
While doing these things won't solve all your money problems, they will help you develop healthy habits that can truly be life-changing. Good spending habits can put more money in your pocket and make your life a lot easier.
When you understand how you can keep your finances under control, then you can live a better, more confident life knowing that you are going in the right direction towards achieving your financial goals.
CONTACT US today to schedule a complimentary financial review to get started on your journey towards the financial future you’ve always dreamed of.