The end of the year is the perfect time to get a checkup on your personal finances. Taking the pulse of your financial wellness not only helps ensure that you’ve been doing the right things throughout the year, it can also put you on a sound financial path for the new year.
Here are three steps to help you finish 2021 strong and position yourself for great financial health in 2022.
Set SMART Goals
According to our recent Next Step survey, one in 10 consumers will make at least one financial resolution for 2022. Ever notice how people set lofty goals at the start of the year, then completely abandon them? It happens all the time. Often, this is because their resolutions are not realistic.
If you want to achieve your financial objectives, try setting SMART goals — in other words, goals that are Specific, Measurable, Attainable, Realistic and Time-based.
For example, our survey found that 44% of people are making finance-related resolutions in 2022 to get out of debt by year’s end. This is an admirable ambition. To stick to this resolution, it helps to be more specific. It’s better to start small and set goals that are more attainable, such as, “I want to cut my credit card debt by 20% within the first six months of the year.”
Then, once you have set such a goal, measure your progress. You can do this effectively by creating a budget and prioritizing your spending.
Form Good Money Habits
Here’s some encouraging math: saving just $125 every month will net you $15,000 in just 10 years. And that’s not including interest. Better still, socking away at least $125 every month is not as hard as it may sound. Have a close look at your spending and you’ll see numerous opportunities to save.
Take that morning latte, for example. The average American worker spends around $1,100 annually on coffee. Just a few visits to your local coffeehouse really add up. Instead, think about brewing your coffee at home and treating yourself to that fancy latte on special occasions. At the end of the week or month move the money you saved to your savings account.
Also, consider setting up automatic deposits to your savings account. Make paying yourself a priority by putting away a certain portion of your income each month. Do this before you spend even a penny on discretionary items like entertainment and restaurants. Most banks make it easy to make an automatic deposit to your savings account on payday.
The good news is that getting your financial house in order is easier than ever, thanks to a wide variety of digital tools that help you track your expenses, pay down debt and find deals on everyday expenses. Many banks also provide user-friendly financial-management tools for budgeting, saving, investing and more.
Take some time at the end of the year to investigate the various online tools, apps and calculators that can help you organize your spending and reach your financial goals. Some apps offer cool features that make saving fun and motivating, such as the ability to create joint goals with family or friends. You can also set up various rules related to your spending, just as you would for your life goals.
Remember: while the new year is a great time to assess your personal-finance habits, it’s not the only time. In fact, you should think about setting up a financial calendar with monthly to-do items. January, for instance, is a good time to look at how you did last year, then set expectations for the coming year based on the lessons you’ve gleaned. And March is a good month to meet with an accountant and discuss retirement contributions before you prepare your taxes.
Looking for more tips on how to strengthen your financial wellness throughout the year? Consider viewing our weekly webinar series on a variety of financial wellness topics, including credit, personal wealth, home ownership and more.
Also, be sure to check out the Next Step Podcast, which covers topics from better budgeting to savings strategies.
Regions Next Step. Advice, guidance and tools to help you break down any financial goal into manageable and achievable steps and inspire you to be proactive in pursuing your goals and dreams.