The country is still reeling from the effects of the pandemic, and so is the economy. The inflation rates are up, gas prices are higher, and pandemic-era relief ended for many Americans. Yet, all around us, there are signs of recovery. As we all look to put a tumultuous year behind us, now is the time to get your finances back on track. Here are five ways to finish the year financially strong, going into the New Year ahead.
1. Plan ahead for holiday spending
Not many of us will take lavish vacations or splurge on luxurious presents during this second annual pandemic-era holiday season. However, that doesn’t mean you need to turn into the Grinch. Experts say the best thing you can do to avoid overspending during the holiday season is to make a list of your gift recipients. Jot down everyone you plan on buying a present for, and set a spending limit for each person. If you go into the holidays with a game plan, you are much less likely to overspend. Overspending — especially by maxing out credit cards — is a mistake that could lead to a difficult start to the New Year. Of course, the potential to overspend during the holidays isn’t unique to this year, but it could lead to extra difficulties for people experiencing financial stress stemming from the coronavirus.
2. Build your emergency fund
If you’re among the lucky few who didn’t experience financial impact during the pandemic, now is the time to create or build up your emergency fund. Most experts recommend keeping at least three to six months of expenses on hand in an accessible, liquid account.
3. Revisit your money goals
As the colder weather sets in, set aside an afternoon to review your money goals. No matter where you stand financially, moving your money in the right direction requires setting thoughtful goals. Consider your saving, spending, and investing plans. And, above all, set specific, realistic, and timely goals.
4. Examine your debt
If you have high-interest loans, such as credit cards with 17 percent APRs or mortgages with high-interest rates, then it might be time to reconsider your repayment strategy. Now is an excellent time to refinance your home loan since mortgage rates are low. If you are in deep credit card debt, see if your creditor still offers any pandemic-era temporary debt relief.
5. Revamp your savings plans for 2022
The savings goals that you set for the new year should reflect your values and where you are in life. For example, you might be saving for a down payment, building an emergency fund, or stockpiling for your retirement. No matter what your goal is, you can factor it into your savings plan.
If you’re struggling to become financially strong and meet your savings goals, a good option might be an automatic saving plan. If you’ve decided to save more money in 2022, then an automated deposit into a separate savings account could be the perfect solution. It’s a “set it and forget it” way to build wealth. Even as little as $25 a week is $100 a month — or $1200 a year!