Top 10 Financial Tips for 2022: Start the New Year Off Right

Feeling a bit off course with your finances? Need some direction for 2022? Not sure where to start?

Don't worry, we've got you covered.

Below are our top 10 financial tips for the new year to help you reassess your goals, optimize your systems, and get back on track with your finances. By the end of this guide, you should be feeling much more optimistic for the year ahead!

Let's get started:

1. Revisit Your Financial Goals

If you don't have any financial goals yet, take 5-10 minutes today to set some. For help with this, check out our 3-step goal-setting guide in our breakdown of the basics of personal finance.

In short, you should have a couple of short-term, medium-term, and long-term financial goals to aim for at all times. These will help you make better financial decisions, and they'll make it easier for you to track your overall financial progress.

When recording your goals, make sure to write them down where they'll be easy to view and update throughout the year. I like to use a simple Google spreadsheet for this, but the notes app on your phone is a worthy option as well.

Now, for those of you that already have a few financial goals set, great! Take a few minutes today to revisit them and make any necessary updates or changes.

Also, if you completed any big goals in the past year (I'm sure you did!), make note of that! It may not seem important now, but it'll be helpful (and motivating) in the future to see when you accomplished different goals and milestones in your personal finance journey.

2. Analyze Your Spending and Savings Habits

Something that sets high-level poker players apart from amateurs is the fact that high-level players analyze their previous hands in order to spot weaknesses and make improvements in their game.

How does this relate to money?

Well, the same can (and should) be done with your finances. Rather than just going into the next year hoping to do better, take time now to analyze your past spending, saving, and investment habits and look for weak spots.

For example:

Are you spending more than you can afford on certain budget categories?Is your spending (and subsequent credit card debt) preventing you from reaching your goals?Are you wasting money on things that don't make you happy?Do your investments align with your values and time horizon?

You don't necessarily have to look back over the entire past year of your financial history in order to do this kind of analysis, but try to go back at least 3-6 months. You should be looking at things like credit card statements, investment accounts, and anything else that'll give you some insight into your current financial health (and what you can do to improve it).

Going forward, using an automatic financial tracker like Mint can make this process a breeze. It'll curate and categorize all your accounts and expenses in one place, making for easy reviewing down the line. It'll also help you stay on top of your expenses and net worth throughout the year.

3. Start Saving for 2022 Expenses NOW

Christmas alone causes 22% of Americans to go into debt to fund their gift purchases. And that's one of the most predictable irregular expenses of the year! Just imagine how many people go into debt when things like birthdays, dental visits, car tire changes, and other (sometimes more easily forgotten) irregular expenses happen to roll around.

To ensure you always have money set aside for these types of events, take time now to set up sinking funds. You'll contribute to these funds throughout the year (typically every month) so that when an irregular but predictable expense (like a birthday, car appointment, taxes, or similar) comes around, you're already prepared. You can also use sinking funds to save for personal goals like a vacation.

This will help prevent overspending and it'll keep you from having to carry credit card debt to fund certain expenses. Smart, right?

To get started, use the information you gathered during your spending analysis (above) to figure out:

What your sinking funds will be; andHow much you'll need to contribute to them each month

As an example, if your regular dental cleanings cost $250 and your next visit is in six months, you'll want to start saving around $42/month (250 ÷ 6) in your "Dental" sinking fund.

For storing your funds, I'd recommend an online bank account like Ally Bank. They offer a high-interest savings account with no minimum balance, no monthly fees, and the option to divvy your account up into "buckets" which are perfect for organizing sinking funds. Plus, by having your money separate from your main bank account, you'll be less likely to accidentally spend it.

4. Update Your Emergency Fund

Sinking funds are great for preparing for predictable expenses, but as we all know, life is very unpredictable. That's why emergency funds are important. Money set aside in an emergency fund is there to cover unexpected costs like home repairs, vet visits, and more extreme things like job loss.

If you already have an emergency fund in place, make sure it's still large enough to cover -- at a minimum -- three months' worth of your living expenses.

If you don't have an emergency fund in place yet, setting one up is almost identical to setting up a sinking fund. You'll want to use an easily accessible high-interest savings account or money market account to store the fund, and you'll want to contribute money every month until it's large enough to cover 3-6 months' worth of your living expenses. In some cases (e.g. if you have an irregular income), you might even want to bump that number up to 8-12 months.

5. Schedule a Monthly Money Meeting

We briefly mentioned this concept at the end of our beginner's budgeting guide but it's worth mentioning again here. Monthly money meetings are a very simple but powerful exercise that'll help you get more in tune with your finances.

Here's what they consist of:

Recording and reviewing your assets (i.e. account balances, cash, money owed to you, etc.) and debts (i.e. credit cards, mortgage, student loans, etc.)Tracking your net worth (by subtracting your total debt amount from the total value of your assets)Updating your goals

You can also take time during your monthly money meeting to pay off your credit card and other bills and to transfer money to your savings and investment accounts.

Doing this each month takes around 30 minutes max and it'll have a hugely positive impact on your finances. By actively analyzing your progress every month, you'll be much more likely to stay on top of your goals and stick to your budget.

Tip:Invite your household members to join you for your monthly money meeting! This will help everyone stay on the same page and by sharing your goals with others, you'll be more likely to stick to them.

6. Start Planning for Retirement

While your retirement may be years away, the earlier you start saving for it, the better.

"But I want to enjoy my money now!"

And you should! Saving for retirement doesn't mean you have to postpone all your fun until you're 65. It's more of a way to look out for your future self. By having a nest egg, you can choose whether or not you want to work when you're older rather than being forced to.

However, the longer you wait, the more you have to save in order to retire comfortably. Here's why:

Let's say you invest $1,000 when you're 20 years old. At an average annual return rate of 10%, you'd have approximately $45,259.26 by the time you turn 60.On the other hand, if you wait until you're 30 to invest that $1,000, at the same rate of return, you'd have only $17,449.40 by the time you turn 60. That's over 60% less.

Point is, due to the power of compound interest, the earlier you start saving and investing for your retirement, the more time you give your money to multiply. So even if you can only contribute $50/month right now, that's much better than nothing!

Once you're ready to get started, check out this retirement planning guide to come up with a solid idea of how and where to invest your funds. Speaking of, if your employer offers a 401(k) match, you'll want to start taking advantage of that right away. It's essentially free money!

7. Automate Your Finances

These days, automating your finances is easier than ever.

Need to transfer $100/month into your savings account to build up your emergency fund? There's a good chance your online banking system makes that possible.Keep forgetting to pay your credit card bill? Set up automatic payments from your chequing account.Want to invest hands-off? Sign up for a robo-advisor and set up automatic deposits.

In the end, you can automate almost everything from your bill payments to your investments. And there's a range of benefits to doing this:you'll save time, you won't have to stress about small financial decisions, and you'll stay on track with your goals.

Of course, not everything will be able to be automated. For anything that needs to be done manually, add it to your monthly money meeting to-do list.

8. Negotiate or Modify Your Bills

If you haven't reviewed your fixed recurring bills in over a year, now's the time to do so! With a bit of time and research, you can either:

Modify your current subscriptions/plans to save money; orNegotiate your bills to a cheaper price

Or you can do both! Here's a nifty video to help you.

To start, make a list of all your current bills including things like your utilities (e.g. phone, internet, cable, energy, etc.), housing (rent/mortgage), subscriptions (streaming, gym, Amazon, etc.), insurance (car insurance, life insurance, etc.), and others. As you write these out, include the monthly cost next to each item.

Next, simply go down the list of expenses and see if there's anything you can cut out. These are the quick and easy wins.

With the remaining bills, take a look at each and really dive into the details. Are you paying for more cellular data than you need? Have you started working from home and no longer need your current level of car insurance? Whatever it may be, do your research and be sure to write detailed notes as you go.

Once you have an idea of the service plans you need, start researching competitor prices. If you find someone offering the same service for less money, make note of it. You can use this information later as negotiation leverage.

After you've gone through each of your bills, you're now ready to call up or write emails to your services providers. If all you want to do is change a plan, email can work, but for negotiating lower prices, phoning is going to be the best option.

You can negotiate prices on things like your rent, phone bill, internet, cable, and more, so don't be afraid to try! Here are some tips to help you get started.

If you don't feel like negotiating the bills yourself (or you don't have the time), you can also try using an automated bill negotiation service like BillCutterz or Truebill. These services will take a small cut out of any savings they secure for you, but if they're unsuccessful in their negotiation, you don't pay a dime.

Once you're done cutting out, modifying, and negotiating your recurring expenses, tally up the amount you'll be saving each month. Then, take those savings and re-route them into investment or savings accounts. Since you're already used to spending this money, you won't even notice it missing.

9. Check Your Credit Reports

The Consumer Financial Protection Bureau recommends checking your credit reports once a year in order to correct mistakes and prevent potential identity fraud. Doing this can save you a lot of money and hassle over the long term.

To get started, head over to AnnualCreditReport.com. While this site may look a bit dated, it's officially authorized by the Federal government and is a one-stop-shop for retrieving your credit reports from each of the big three credit reporting agencies (TransUnion, Equifax, and Experian).

Once you have your reports in front of you, check to make sure all your information is correct and up-to-date. If you notice anything incorrect or suspicious, you can file a dispute with the reporting agency.

Unfortunately, the credit reports you receive won't include your credit scores. But if you want to check those, you can easily do so with a free service like Credit Karma or Credit Sesame. These services won't impact your credit and can be helpful for monitoring your scores throughout the year.

10. Try to Increase Your Income

If you're currently answering surveys for cash on Eureka, you've already taken some steps toward increasing your income. But don't stop there! Consider funneling that money into alternative investments to increase your profits even more, or picking up another side hustle to continue expanding your income streams.

Another option? Looking for a new job.

We're currently in a job market where employers are competing heavily for great talent. If you have a valuable skill set, you could lock down a 20% - 30% pay raise just by switching jobs.

Don't believe me?

Just recently, CNBC wrote about a 34-year-old who increased her salary by an average of 39% with each new job switch. She even shares some of her tips to help others do the same.

Of course, increased pay isn't the only thing you should consider when switching jobs. Happiness should be your top priority. But if you can find something that offers better pay, additional perks, and a more comfortable work environment, it's worth looking into.

Final Thoughts

We hope you enjoyed this list of our top 10 financial tips for the new year! If you're eager to continue learning and elevating your money game, we highly recommend picking up a few personal finance books to read throughout the year. This will help you learn new lessons, strategies, and systems from a range of experts.

Here are a couple of my favorites to start out with:

The Richest Man in Babylon - Written by George S. Clason, this book teaches basic but essential personal finance lessons with parables from ancient Babylon.I Will Teach You To Be Rich - Written by Ramit Sethi, this book is the modern no-BS guide to money management.

While reading about personal finance isn't always the most captivating, these books are easy reads that'll give you some ideas on how to enjoy financial success without sacrificing your happiness. Good luck!