6 Ways to Stay Financially Fit in 2022

About the author: Lamar Watson, CFP®, is a Fee-Only Financial Advisor in the Washington, D.C. area that works with clients virtually across the country. Lamar's work with his clients focuses on budgeting, employee benefits, paying down debt, buying their first home, and investing. Lamar is the Founder of Dream Financial Planning, a virtual Fiduciary Financial Planning firm specifically designed to help young professionals and minorities take control of their finances and fulfill their dreams. Feel free to schedule a complimentary consultation to learn how we use the DREAM Financial Planning Process ™ to help our clients achieve their goals. 

Download our quick reference guide that covers the most important annual limits and figures for 2022.

The new year is here, and your resolutions are probably well underway. While you may set goals to get more physically fit, it is also important to consider your financial fitness going into the new year. If your finances are not where you want them to be, or maybe they need a little tune-up, the six tips below will help you get your finances in shape.

1. Trim the Fat

One of the first steps toward a healthier financial future is spending less. If you take the time to look hard at your budget, odds are you can find some excess that you can easily trim off without feeling a pinch. Start with your non-essentials, such as cable and phone. Do you really need extra movie channels and data? When was the last time you shopped around to compare prices? Next, delve into spending items such as clothing, groceries, and entertainment, and see if smart shopping or more date nights at home can help free up some extra money each month. Then, look at your utility bills and find ways to reduce them. Finally, discipline yourself to follow good energy-saving tips to reduce the overall cost of your energy bills.

2. Tone Up Your Debt

Odds are, the holidays have increased your credit card bills. Do not let that debt snowball higher than it needs to by accruing interest. Start with your highest interest rate card, and set a larger payment in your budget to begin lessening that total. Once it is paid off, use that same payment to start tackling your next high-interest debt, and so on. A critical part to remember is that when paying only your minimum payment, it will take you 10 years and a significant amount of interest to pay off your card, so always pay more than the minimum if you are looking to pay off debt.

3. Whip Your Credit into Shape

Your credit score can affect many aspects of your financial life. Whether you are looking to buy a house, car or to take out a loan to start a business, your credit score will be used to determine how much interest you will pay and how likely you are to even get those funds. Unfortunately, many people neglect their scores until they need them, and at that point, it can be difficult to improve quickly. Keep your credit card balance far from the limits, be sure to make payments on time, and monitor your score for negative marks.

4. Load Up on Savings

Once you have trimmed the fat off your budget, you will want to put some of that into savings. One goal to start immediately is creating an emergency fund. Surprise repairs, medical bills, and layoffs can damage your financial health if you are not prepared for them. Having this fund available for these times can lessen the blow and help you stay on top of your bills so you do not fall behind.

5. Put Retirement Savings in Your Routine

Saving for retirement is critical to your future. Many people do not save enough for their retirement or wait so long that they stress their budget to meet their goals. Make it a point this year to focus on your retirement goals and find extra funds that you can put into your account so that it has the necessary time to grow as it should. Find out if your company matches contributions, and if so, try to put in as close to the amount they will match as possible.

6. Start a New Investing Routine

Investing is the quickest way to grow your wealth, but many people are afraid to enter the world of investing because they are afraid of losing money. Others are under the misconception that you must invest a lot of money when the truth is that you can begin your investment journey with as little as $100. Start small so you can get the hang of it, and if you have more money to invest, consider meeting with a financial advisor who can help you pick a mix of funds based on your risk tolerance.

Get your finances healthy this year and set attainable goals to help you grow your wealth and get started toward a secure financial future.

Dream Financial Planning Process ™

Whether you're managing student loan debt, starting a family, or considering buying your first home, the DREAM Financial Planning Process™ is tailored to the unique needs of busy professionals in their 30s and 40s. This process focuses more on short-term goals while you grow and evolve in your personal and professional life. So if you're looking for guidance on Financial Planning, optimizing employee benefits, budgeting, student loans, and managing your 401k or investments, we can help.

Complimentary Consultation

With uncertainty surrounding the economic stability of our country, it's okay to have fears and anxieties surrounding your own savings and investments. The most productive course of action from here is to reach out to Dream Financial Planning (or whoever your trusted advisor might be) and discuss your options. It's easy to have knee-jerk reactions when it feels like the bottom is falling out, but it is imperative to make decisions using research-backed data and a level head. If you'd like a Complimentary Review and risk assessment of your investment portfolio, feel free to send me an e-mail.

Monthly Newsletter

In the August Newsletter, I explore how you should invest money for your short-term goals after you've established an emergency fund. I also discuss how a Financial Advisor can help you avoid emotional decision-making with U.S. News and World Report and how to know if your Financial Advisor is the right fit for you. There are also blog posts where I outline how to complete a mid-year financial check-up and 5 college planning mistakes to avoid.

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