No matter what time of the year it is, reviewing your current financial situation is essential. You can check your spending habits and investments and evaluate any past or new debt you’ve taken on. When it comes to setting goals for your financial wellness, there’s always room to pivot or even form a new, unique pattern that could lead you to reach your long-term financial goals. There are many areas to prioritize healthy financial habits in 2022, but I suggest starting with these three key areas.
Create a Budget
The best way to create a new budget, or stick to the one you set for yourself previously, is to review how much money is going into your accounts each month and how much is going out. For starters, it’s best to check a few critical areas outside of your mortgage, insurance, and household bills to ensure you’re not drastically overspending in one specific area.
- At-Home Entertainment – e., Streaming services.
- Food – e., Eating out at restaurants
- Entertainment – e., Movie theatres, concerts, etc.
- Shopping – e., Multiple subscription services
- Miscellaneous Impulse Purchases
After you’ve set a budget or adjusted yours from the previous year, it’s best to revisit the plan once a quarter to ensure there are not any significant updates to be made. Setting a budget is arguably the most critical area to set yourself up for success and has been proven to cause less stress. It helps you keep your eye on your long-term financial goals and provides a sense of financial security when uncertain situations arise that can cause you to dip into your savings.
Review Your Retirement Savings
Another key area in forming good financial habits is having a solid retirement plan. As a financial advisor, one of my goals is building customized financial strategies to help you attain your goals through many avenues, one of those being your retirement plan. It’s critical to make the most of your contributions so you can live out your golden years with financial security.
Recently, the IRS has announced that contribution limits are increasing for 401(k) plans. The increase is now $20,500, up from $19,500. The IRS also issued technical guidance regarding all cost‑of‑living adjustments affecting dollar limitations for pension plans and other retirement-related items for the tax year 2022. It’s important to pay attention to these changes so you can adjust your retirement account or review your contributions to your workplace 401(k) program. Staying on top of your retirement contributions will help you know when you can stop working and that you’ll have the necessary income to sustain your quality of life.
Plan Ahead for Your Children
Individuals, parents, or even grandparents often wish they would’ve started earlier to save for education costs. I often suggest that the first quarter of the year is a great time to review or educate yourself on new investments or saving vehicles that could potentially lead you to accomplish a specific goal. Many of our clients strive to pay for or contribute to their children’s or grandchildren’s education with 529 College Savings Plans. With the growing cost of education, it’s never too early to start in today's world.
At DKS Financial Strategies, our team is equipped to advise you on several education-saving accounts that can potentially ease the burden of higher education costs.
I hope you take some time this year to create new financial habits and if you need any help or don’t know where to start, please reach out to me via my contact information below. I would be happy to chat with you. To learn more about our services, visit dksfinancialstrategies.com/contact.