The best way to have your most successful financial year and a chance for the best year of your life is not luck (at least not consistently). It is a combination of some purposeful decisions across time where each new decision builds off the previous one. You don’t need to turn everything upside down, rather you will build smarter habits, use better systems, and make minor improvements that will compound over time.
Side Hustles Come First for Dollars
Before we talk about budgets and debt and banks, we need to talk about income. One of fastest ways to upgrade your financial situation is through the continued development of income-producing activities outside of your 9-5 job. By this I mean the creation of true value in a manner that is separate from gig apps or multi-level marketing schemes.
If you love to take pictures, sell photography shoots. If you are a woodworking expert – sell custom-made items. If you are talented at cooking, try selling prepared food locally. The idea here is not to quit your job tomorrow, but rather to plant a seed for your long-term freedom.
The Midpoint Reality Check: You Need a Plan for Your Money
Here is the uncomfortable truth – if there is no plan for your money, then it will go away. This is the reason for needing a monthly spending plan. This is not to be confused with a strict budget; this will act more as a map to give you direction on where to use your money.
Having a plan before spending your money is important if you want to know where it went. Planning in advance to spend your money on something and having a general idea of how much needs to be spent would be similar to how you shop with a list vs. how you would shop when you just impulse buy everything that looks good at the time.
Entering into a New Year, People Often Make a List of Resolutions.
If You Have Consumer Debt such as Credit Card Debt, Car Loan Debt, Personal Loan Debt or Student Loan Debt, Then Your Resolution Needs to Be About Paying Off Your Debt This Year. Make a List of All of Your Debt with the Interest Rates on Them and What Your Minimum Monthly Payments Are so That You Can Choose Which One to Focus On First.
Some People Focus on Paying Off the Smallest Loan Balance First, While Others Will Focus On Paying Off the Loan with the Highest Interest Rate. Both of These Methods Will Work, Because You Will Get Momentum with Each Loan Paid Off, at Which Point You Will Use the Money from Each Paid Loan To Pay Off the Next One Faster.
This Will Create a Snowball Effect That Will Allow You to Pay Off Your Debt in Full (Or Sooner).
You Should Consider Moving Money That You Have in Your Savings Account To Another Bank (Like An Online Bank) That Offers a Higher Interest Rate.
If You Are Paying Monthly Maintenance Fees to Your Bank To Have Your Money There, Then You Are Paying To Rent Your Money. This Will No Longer Be The Case In 2023 and Beyond, So You Should Look for Banks with No Maintenance Fees.
Consider Shopping Around for Auto Insurance Every Year or Two (Many People Overpay for Their Auto Insurance Every Year). Shopping Around Will Save You Real Money.
There is a wide range of pricing for comparable insurance from various insurers. If your new policy saves you at least $20–30 per month, then that is a significant savings. Also, if you are getting quotes, see if combining renters or homeowners insurance will qualify you for any additional savings.
Retirement is closer than you think — even if it may not feel that way now.
Once you have worked towards being completely debt-free, your next objective is to focus on yourself in the future. Make a habit of consistently saving for retirement through accounts like a 401(k) or IRA. Saving smaller amounts each month can help you.
As a general guideline, save approximately 10–15% of your salary. If you feel this is too much, then save an amount that feels comfortable until you can increase that amount later. The major advantages of investing for retirement are the tax benefits and the potential for long-term growth — something that can’t be obtained through a regular savings account.
The 2022 year can be the year that changes everything for you, not because you are buying into the hype, but because you are taking deliberate steps (better banking, smarter spending, aggressively eliminating debt, consistently investing, and developing additional income).
You don’t have to be perfect; you simply need to make progress.
One of the best ways to make progress is to take one action towards your financial goals and then to take additional actions until you have created enough momentum to create financial freedom.
