Welcome to 2022, a new year offering fresh opportunities and challenges—and you can start it by accepting some fiscal responsibilities that offer both. The pandemic has disrupted the personal finances of many people, and their financial situation this year may be quite different from 2021 or 2020. The beginning of the year is the perfect time to take a look at personal finances, how we use them and what can be done to be slightly more strategic with saving. To kick off this year, following are a few simple tasks you can quickly start to take more control of your money for the next 12 months.
- Know where your money is going. Keep track of and write down everything that you spend every day. Do you know how much you spend each month on food, both groceries and from restaurants? What about entertainment—movies, concerts, streaming video or music services, sporting events, video games, and books? If you have a pet, what are your costs for pet food, grooming, medicine, veterinarian visits, paid pet sitting and walking, or stays in a pet hotel? How much are you buying online for home delivery? What are you spending on in-store purchases? Are you buying coffee or tea every day, or your lunch? You may think you know, but do you really have a precise understanding of where your money goes? Keeping close track of your spending will help you identify areas where you may need to cut back or shift where your money goes. As the saying goes, it’s easier to know where you’re going if you know where you’ve been. Delta Community has a Money Management tool in both its Online and Mobile Banking that can help track spending by category; and our members may want to look at it. Delta Community also has a variety of calculators to help analyze different costs, including mortgages and other loans.
- Save some money every month, even it’s not much, and put it into a financial account. Commit to putting a little more money each month into an Individual Retirement Account (IRA), employer-sponsored 401(k) plan, or a checking or savings account. If money is tight and your finances are under pressure due to increased costs or a lowered income, you may not have any extra funds to save. However, you can still try to find five dollars a month, $10 or, maybe, more, and put it into financial account where it has the opportunity to accumulate interest and grow. An IRA or 401(k) might help lower your taxes, and the 401(k) is eligible for receiving some amount of additional, matching funds from your employer, so if you save in a 401(k) you could get more money that’s not coming from your paycheck. Now, you could also put the money in a jar in your home, which may interest you, but that won’t have the money earning any interest.
- Don't build up more debt. Having a mortgage is usual for many of us, as is having a car loan, credit card debt, a student loan from college, or medical bills. It’s important to manage debt carefully and know the difference between good debt and bad debt. Generally, debt should be limited to what is absolutely necessary to manage your life. If you can use your credit card less, or divert more money to paying off high-interest debt, then that payment should be a priority since it will assist in lowering your costs. There is a situation where more debt may be able to help lower your overall debt, but this option needs to be analyzed carefully to determine if meets your specific needs. It may be that another loan would allow you to consolidate—package together—some other debts and then provide a lower total interest rate, but research this thoroughly to see if it would lower your payments. Saving money while paying off debt is a financial fix worth making for the new year.
- Buy store brands that are more economical. Whether it's clothing or food, buying store brands can cost less without sacrificing quality. Many factories that make name brands also make the same products for store brands, so often all you are giving up in the store-brand product is a more well-known name and paying extra for it. Try the store brand as an experiment, since you can always switch to another brand if you’re not happy with it.
- Measure how much cellphone data you use and consider getting a lower-cost plan. Are you using all your cellphone data every month? Is your phone connecting automatically to trusted wi-fi networks to save data by switching away from your cellphone carrier’s cellular network? Automatically connecting to wi-fi networks you know and trust can save a lot of data, and if you’re using less data you may want to switch to a cheaper annual or monthly cellular service plan. Track your data usage for several months, and if you're not using most of it, consider transferring to a lower-cost plan or a cheaper service provider.
- Bonus fix—invest in learning or training that can help with your career. Boosting your skills and knowledge can help you progress in your career, which generally means earning more money. There are many relatively inexpensive online courses and certificate programs to enhance your professional credentials and, potentially, help you advance your career to positions of greater responsibility and higher income. Certificate programs (that may involve monitored examinations) are offered by professional associations, colleges, and universities for different industries and careers. Another option may be in-person classes at a local community college. Knowing more and having more skills are beneficial even without any guarantee that they will increase your value and enlarge your paycheck.
Get more free financial advice from Delta Community
For more information that may help you manage your finances at any age, look into the free Delta Community Financial Education Center webinars on a range of practical financial topics. Please visit the Financial Education Center's Events & Seminars page to register for its on-demand webinars.
Some other blog posts that may help fix your finances for this year are: