2022 Guide to Financial Wellness: 7 Tips for Getting Your Finances in Order

The new year brings the opportunity to take a fresh look at your finances and make progress toward improving your financial fitness, or wellness. What does it mean to be financially fit? As with physical fitness, the definition may be different for everyone, but these criteria are often included:

Being in control of your monthly financial obligations and day-to-day spending
Having enough savings to get you through a financial emergency — losing your job or needing to take care of a major home or vehicle repair, for example
Staying on track toward your financial goals
Having the financial means to make choices that enable you to do what you enjoy (i.e. traveling or making a major purchase)

If you’re looking to get your finances on track but aren’t sure where to get started, we’re here to help. As you think about your own circumstances, consider these financial wellness and money management tips for 2022 and beyond:

1. Establish or reassess your financial goals.

Financial goals not only provide a framework for your financial activity, but also hold the power to motivate you to build healthy financial habits for life. If you haven’t gotten around to creating or reviewing your financial goals yet, now is a perfect time! How do you set financial goals?

First, think about what you’d like to achieve — paying off credit card debt; saving for a home, car, vacation or your child’s education; building up your retirement savings, etc. — and where you’d like to be financially a year, five years and 10 years down the road, as well as later in life. Then write your goals down in order of priority and assign a timeline to each of them. Create a strategy for achieving each goal, such as setting up monthly automatic savings deposits of a certain amount. If this seems like a daunting task, try working in small steps and use financial calculators to help with calculating reasonable savings goals, or in tap into resources at your local bank.

Once you do have goals in place, check in on your progress frequently and reassess them as needed to make sure they still align with your short-, mid- and long-term plans. Be sure to celebrate your achievements, too, to keep driving yourself forward.

2. Evaluate your current accounts.

Financial fitness requires having the tools you need to achieve your goals. When was the last time you compared checking and savings accounts, loan rates and terms, and credit cards to make sure they still fit your needs? Take some time to evaluate each and how well they are serving you.

Checking: A personal checking account may be the financial tool you turn to most often for your day-to-day spending and other financial activities such as paying your monthly bills. Think about how many times you reach for your debit card— to pay for your morning cup of coffee, lunch, gas fill-ups and more. That’s why it’s so important that your checking account has all of the features you want. Are services like online and mobile banking convenient to use? What features does it offer? How does it stack up to others in terms of fees?
Savings: Savings accounts can help you reach financial goals such as establishing an emergency fund, saving for a large purchase or building your wealth. Take a look at your savings account balance(s) to see where you stand and set goals for the coming weeks, months and years. A good place to begin is building up an emergency fund that will cover six months of living expenses in case of an unforeseen job loss or other financial shock. You might open more than one savings account — e.g., one for emergencies, another for a mortgage down payment and yet another for vacations. Make sure there is an convenient way to set up regular, automatic transfers between your checking and savings account(s) so you can easily build your savings.
Loans: Regularly reviewing in on your loans is a smart financial move. Whether you have a mortgage, home equity loan or line of credit, student loan, personal loan, home improvement loan or vehicle loan, review its terms as well as your progress in paying the balance down. Are you keeping up with your monthly payments? Are you paying more toward the principal when you can to pay the loan off sooner? You can also check in with your lender if you’re interested in options for a lower interest rate or payment.
Credit Cards: Credit cards are a beneficial payment tool, but it’s important to keep your spending at a manageable level. If you have any outstanding credit card debt, create a plan to pay off that balance, then make a habit of using your credit card to spend only what you know you can pay off in full by the due date each month.
Investments: Consult your investment adviser to review how your accounts have performed in 2021 and whether your portfolio needs to be rebalanced based on market forecasts and your changing needs. Make sure that the path you’re on is working in your favor and is keeping you on track to achieving your investment goals.

3. Review your household budget.

Conscientious budgeting provides guidelines and transparency around your spending. A budget keeps track of your monthly expenses (essential costs of living), investments in the future (savings, education, a home, retirement, etc.) and discretionary spending. If you don’t have a budget in writing, the time is right to create one.

Once you have an established budget, stick to it. Also, watch for opportunities to cut back on spending to strengthen your financial position. While discretionary spending is an obvious place to look, you may also be able to reduce your essential expenses by conserving on utilities, refinancing your home to take advantage of lower interest rates or even moving to a less expensive neighborhood.

4. Never miss a payment: Set it and forget it.

Paying your bills on time is critical to your financial wellness. It helps you avoid late fees, dings to your credit score and the anxiety that can come with your finances being in disarray. But unless you have a system in place, keeping track of the due dates of several different bills each month can be difficult. To keep your bill payments on track, it helps to use tools such as online banking, including online bill pay.

With online bill pay, you can schedule automatic bill payments so that you never miss a monthly payment. Online banking also enables you to set reminder alerts to let you know when a payment due date is coming up.

5. Understand and monitor how creditors see you.

A person’s credit score is generally viewed as an important indicator of their financial health. When lenders, landlords and other creditors consider your creditworthiness, they look at your credit report, which details the history of your financial activity. They also review your credit score, the three-digit number that reflects that history, and use both to assess how you have managed your personal finances. The higher your credit score, the better your credit is considered to be.

Your credit score reflects activity such as whether you consistently pay your bills on time, how heavily you rely on credit (less is better), how often you apply for credit and whether you have ever defaulted on a loan. Consumers who maintain high credit scores are those who show good judgment in managing their money and make good on any loan or credit commitment.

Where can you find and monitor your credit score? You can request one free credit report every 12 months from each of the three reporting agencies: Experian, Equifax and TransUnion at annualcreditreport.com or 1-877-322-8228. There are also a variety of free credit monitoring services online.

6. Round up all of your financial documents.

Keeping your important financial documents and information up to date, organized and safe isn’t simply a matter of convenient reference; it also helps prepare you in the event of an emergency. You never know when you may need immediate access to your bank, credit card, loan or investment account numbers, as well as contact information for your creditors. Keep financial documents and hard-copy backups of any electronically stored financial information with your other important documents — Social Security cards, deeds, titles, birth and marriage certificates, etc. — in a safe deposit box or other secure location.

7. Stay the course.

Commit to frequent reviews of your finances to ensure you’re on track toward your goals. Set calendar reminders so you can check in on your finances once a month or once a quarter, depending which works best for you, with a more comprehensive review annually. Of course, some aspects of your finances need daily attention, so take full advantage of tools like online and mobile banking that offer real-time transparency.

Just as an annual checkup with your doctor safeguards your physical fitness, an annual check-in on your finances can help ensure your financial fitness. There’s never been a better time than today to give your finances a closer look. Plus, financial fitness is also a life-long journey! Stick with it and don’t get discouraged – it’s ok to make gradual improvements and celebrate the small victories along the way. If you need assistance with budgeting, money management tips or your financial goals, we’re here to help! Contact your local Dollar Bank office today.

This article is for general information purposes only and is not intended to provide legal, tax, accounting or financial advice. Any reliance on the information herein is solely and exclusively at your own risk and you are urged to do your own independent research. To the extent information herein references an outside resource or Internet site, Dollar Bank is not responsible for information, products or services obtained from outside sources and Dollar Bank will not be liable for any damages that may result from your access to outside resources. As always, please consult your own counsel, accountant, or other advisor regarding your specific situation.

Posted: December 30, 2021