December is the perfect time to identify some financial new year’s resolutions for the year 2022 that, while simple, may have a profound effect on your financial strategy and your ability to properly prepare yourself to enjoy your preferred retirement lifestyle. You should look at the new year as a good time to turn the page on some of your past financial hiccups and strategy mistakes and start with a blank slate.
Build a budget
As is likely no surprise, the first resolution is to build a budget and stick to it. It all starts with breaking down your income, expenses, and various assets. Does your income comfortably outpace your expenses? If not, changes may be in order.
Building a budget for the first time, or refining your current budget, is a good reason to meet with your financial services professional. And if you don’t already have one? Building a budget is a good reason to get one.
And don’t forget that a financial service professional will be able to show you how the budgeting you do today could make your life easier tomorrow. Ask yourself this: If you knew a couple of modest sacrifices in your 30s, 40s, or 50s would mean you could retire when and how you wanted, would you make those sacrifices?
Saving is essential
The next important financial new year’s resolution for 2022 is to save something every month, even if it’s not a significant amount of money. Let’s say you’re able to save $100 a month. You may say to yourself, “what’s a measly $100 a month going to do for me?” But I’d encourage you to think about the bigger picture. $100 a month is $1,200 a year. And $100 a month over five years is $6,000.
And $100 a month right now doesn’t mean $100 a month forever. Maybe you’ll end up with a pay raise or maybe an asset will pay off, either of which would allow you to increase how much you’re saving. The point is to simply start saving some amount every month.
You should also note that some people have good luck with sites that take the spare change on each of your debit card and credit card purchases and funnel that money into a separate savings account. A lot of people may be genuinely surprised at how quickly all that spare change transforms into a fairly significant pile of money.
Don’t forget to pay yourself
The next prudent financial new year’s resolution for 2022 is to pay yourself first. Admittedly, this concept sounds a little confusing. But look at it this way: paying yourself first means paying your future self.
The easiest way to pay yourself first is to contribute to a retirement savings tool like a 401(k). Earmarking money for a retirement account is particularly important if your employer offers a financial match.
Remember, if you pay everything and everyone else first, the chances are pretty good you won’t pay your future self anything at all.
Setting aside 10 percent of your monthly income for future needs like retirement is a common savings goal. That sounds like a lot, but if your employer offers a match of up to four percent of your annual income, you’ll then only need to kick in six percent of your income to hit that 10 percent figure.
Much like budgeting, coming up with a clear and workable savings strategy is a great reason to work closely with a financial services professional.
Shop around for insurance
Analyzing your current insurance plans may be a smart addition to your list of financial new year’s resolutions. This also may be another step that you want to take with the assistance of your financial services professional.
In addition to closely examining your current health insurance during your open enrollment period, you may want to make sure both your homeowners’ insurance and auto insurance products are meeting your needs at a price that you think is reasonable. Remember, there’s no harm in shopping around for good homeowners’ and auto insurance at a better price.
Advisory services are offered through Buska Wealth Management, LLC, a SEC Investment Advisor. Insurance products and services are offered through Buska Retirement Solutions, Inc., an affiliated company. Buska Retirement Solutions, Inc. and Buska Wealth Management, LLC are not affiliated or endorsed by the Social Security Administration or any government agency.
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