It’s a new year, which feels like a fresh start in numerous ways. Approach the new year responsibly, by setting new goals and habits to establish better financial skills. Break some bad habits and incorporate some new ones to better you and your wallet!
Financial Dos for 2022
Building new financial habits is so important for all aspects of your life. It will help you worry less about money, as you’re actively taking steps to build your financial portfolio. Once you get into the habit of being more financially aware, it will naturally become a part of your life. Below are some simple steps to take and break in regards to all things financial.
Pay Yourself First
This is a simple habit but can be the hardest to implement. When you pay yourself first, you are prioritizing your savings or long-term financial goals before doing any personal spending. There are many ways to include this habit in your life, and many where you don’t even have to think about it. Setting up an automatic transfer when you receive a paycheck is a great way to ensure that money is being put into your savings account. This can help you form a financial buffer and can assist you in the future with large or unexpected expenses.
Read more about how to choose a long-term savings plan.
Automatic Bill Pay
When you set up automatic bill pay, it simply means you are setting up recurring money transfers to pay certain vendors on a regular basis. There are many benefits to setting this up for the personal account or the business owner. If you choose to utilize automatic bill pay, it can help a customer improve their credit score, since the payments will be on time. When you make payments on time you avoid late fees as well as other penalties.
Here are four other ways to automate your financial habits.
If you’re considering this for your business, you can get benefits such as lowering business costs, increased payment security, regular cash flow, and an enhanced client experience.
Quarterly Financial Check-ins
It’s a good idea to look at your finances on a yearly basis, but incorporating a financial review can help you become more in tune with your money and your goals. There are a few things you can look at when implementing a quarterly review.
A good place to start is to look at your credit score and see how you can either maintain it or make improvements. Look at your budget and income and any changes that may have occurred over the year. If you have debt, take a glance at your debt repayment plan. Are you still on track to pay off your debt or does it need adjusting?
Additionally, you’ll want to look at your investments, insurance, and your retirement contributions. A quarterly check-in is a way to update your goals for your financial portfolio. Look at the progress you’ve made and maybe check off a few milestones!
Be Honest with Your Financials
It can be awkward to talk about money with just about anyone, but it’s very important to be honest and upfront about it. The more you talk about your financial situation, the more you have a clear picture of all the financial details.
Ask For the Pay You Deserve
This can be one of the most difficult aspects of having a job. So many people work for way less than they deserve, but are afraid to ask the uncomfortable questions. If you’re thinking of asking for a raise, it’s important to do your research beforehand. Sites like LinkedIn, Glassdoor, and Salary.com can help you determine what the right salary is for your job title. Identify a salary range that feels comfortable and one that fits in with your budget.
It’s important not to be offended by a lower-than-expected offer. Many companies start with lower offers, expecting you to negotiate up. In other words, they are expecting a counteroffer. When considering your counteroffer, ask for what you’re worth and take your skills seriously.
Financial Don’ts for 2022
Now that we’ve discussed the good habits to bring into the new year, let’s take some time to look at the habits to leave behind in 2021.
Racking up Credit Card Debt
Credit cards are a necessary part of building a strong financial portfolio, however, they can also lead to debilitating amounts of debt. It is vital that you live within your means, and don’t stretch your budget, just because you have a high credit limit. Whenever you’re shopping with credit, always evaluate if you can afford to take on the expense. If you are careless with your credit cards, these costs can add up dramatically and prevent you from saving money for retirement or other important financial goals.
Learn more about credit mistakes to avoid.
Shopping for Dopamine
Buying things can feel electric. However, the adrenaline rush you may get from buying a new piece of clothing or furniture can become an addiction if you’re not tracking your spending. A great exercise is to track your spending for a week or a month. That morning coffee, the late-night grocery run, and the meals out add up at a startling rate and this can be a great wake-up call.
Unsure of how to track your spending? There are a plethora of online and mobile tools that allow you to sync your transactions or put them in manually. This will give you a spending summary that’s easy to understand and also to see where changes need to be made.
Don’t Abandon Your Budget
Sticking to a budget isn’t the easiest thing in the world and it can be quite tempting to call it quits on more than one occasion. However, sticking to your budget is setting you up for success in the future. When you don’t save or invest, that money won’t stick around and grow to be there for you years down the road.
Remember to celebrate the financial milestones you’ve already achieved. This is you recognizing the struggle of managing your money and choosing to save for your future. The changes you’re making, whatever the size, will be felt in the present day and for the years to come.
Financial advisors are there to help you every step of the way. Reach out to us at Highlands Community Bank so we can advise you and your financial goals!