Do you have high hopes for 2022? If you’re like many goal-setters, you want to make better money moves in the new year. But best intentions aside, it can be challenging to make these goals a reality. All it takes is a handful of mistakes to throw you off course.
So how can you ensure you set and achieve your financial resolutions? Try to avoid these bad money habits in 2022.
1. Not Saving for an Emergency
The past couple of years have proven you can’t always expect what’s coming next. Life has a lot of twists and turns, and they can wind up costing you a lot of money. Maybe it’s a sudden trip to the ER after you break your ankle, or your car stops working one bright morning before work.
An unexpected medical expense or auto repair might use up most of a paycheck (or more) that you need to pay the bills.
That’s why having an emergency fund is so critical to your financial security. This fund is a special stash of savings that gives you the cash to cover these expenses without using the money you need for the essentials.
If you need to see the doctor in the new year before you manage to set aside savings, don’t stress — you don’t have to choose between your health and rent. If you need money to pay for unexpected expenses you can’t afford, research installment loans online.
An online installment loan comes with predictable payments that make it easier to repay than a lump-sum payday loan. As fixed payments, they stay the same each month, so they’re easier to include in your budget.
2. Using the Wrong Savings Account
Once you start saving, think twice about where you put it. Most basic savings accounts earn an annual percentage yield of 0.06%. That means you aren’t earning any meaningful interest on anything you manage to sock away.
But, you could earn 10 times as much with a simple move to a high-yield savings account. Do the research — you can find an online bank that provides 0.50–0.60% interest with no minimum balance or limits on transfers.
3. Forgetting to Budget for Irregular Expenses
If you don’t already have a budget, make this a new year’s resolution for 2022. A budget brings intention to your spending so that you can achieve your goals.
But watch out for infrequent purchases when making this spending plan. Your annual AAA membership, property taxes, planned car maintenance, even toiletries and wedding gifts — these expenses are easy to forget until it’s too late.
Next thing you know AAA’s taken out their membership dues the same month you’re expected to attend your best friend’s wedding and switch over to winter tires.
Juggling all these infrequent expenses with your usual bills is tough if you aren’t prepared. You may even have to dip into savings or take out an installment loan if it’s an essential expense.
If you have the foresight to budget for these expenses throughout the year, they won’t have the power to blindside you. Setting aside roughly $7 a month is a lot easier than coughing up the full $74 for your basic AAA membership all in one go.
Bottom Line: Make 2022 a Year of Financial Gains
Subtle changes to the way you manage your money can bring about big changes in the new year. Avoid these mistakes to see financial gains in 2022.
