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The last couple of years have been tough. And not just because we’re all living through a global pandemic. According to a recent study, more than half of Americans considered 2020 a “financial disaster.” As a result, many used 2021 as a rebound year of sorts—a time to buckle down, save, and try to recover from the financial setbacks they suffered.
The good news, there’s collective optimism that the year to come will offer more. “Going into 2022, Americans feel optimistic about the future and their finances,” according to a report by Fidelity. Of those surveyed, six in 10 Americans say they’re hopeful about the future and more than 7 in 10 are confident that their finances will continue to improve next year.
But that doesn’t happen without hard work. To see a change, you have to be willing to take the driver’s seat. And that means setting goals and making—and committing to—a sound plan to reach them.
What’s that? You’re not exactly jumping at the chance to spend what little free time you have on holding a conversation about your finances? Consider scheduling a Money Date before the new year. In its most basic form, a Money Date is a scheduled, focused, and honest conversation about your finances and your short- and long-term priorities. (If you need a little guidance, you can always pick up our Money Date Box for Couples or Individuals!)
This works, because one of the best ways to reach any goal is to have a clear, easy-to-follow path to success. But where exactly should you begin—and what should be the first step you take?
Setting a realistic goal is arguably most important, so during your Money Date, think about what your goal is. To save more? To improve your credit score? To open an investment account? Then, lay out a couple actions you can take to get yourself there.
And if you’re still looking for a little inspiration? Here, some practical places to start:
As part of your Money Date, do an audit of your spending habits. This will help you figure out where “the fat” is—the areas where you spend in excess. Once you have an idea of where you can—and should—cut back, make it a point to limit credit card use in these areas. For most people, it’s a lot easier to budget with cash than plastic, since you’re actually holding physical, finite goods. Alternatively, you can put the cash you’ve budgeted for that area onto a prepaid debit card. This way, when the money is gone, you know it’s time to stop spending.
One of the best ways to get yourself into a better financial place is, of course, to spend less and save more. And although it’s great to consistently budget, setting “no spend” days can feel a little more manageable—and set you up for long-term success.
So how exactly does it work? Set aside a few days per month in which you severely limit spending—maybe every Sunday. Mark those days on your calendar as a visual reminder. Alternatively, you can try Frugal February. Essentially, it’s a month-long effort to be more mindful of your spending and approach any purchases frugally.
These instances don’t have to (and shouldn’t be!) total drags. Get creative—there are plenty of free activities you can take advantage of, and you can have fun cooking your own meals as a family. Remember: Every little bit helps.
When you’re trying to save, it’s helpful—and motivating—to see exactly how much you’re saving. And if you’re savings are mixed in with your day-to-day funds or an existing savings account, the whole concept can feel a little more abstract.
A different way to approach things: open a new account for your new efforts. This is an especially good strategy if you’re saving for something specific, like an emergency fun or even a vacation. Put money saved directly into this new account, so you can see exactly how it grows over time. Also helpful: You won’t accidentally spend any of that money on something else.
The easiest way to make sure you pay your credit card balance on time? To set up recurring payments. The same goes for your savings account. Consider setting up recurring deposits from your paycheck or via bank transfers. Even $25 per month is a start. This way, no matter what happens over the course of the month, your money will end up right where you want it to.
As a whole, Americans aren’t saving enough to cover retirement expenses. In the new year, make it a point to adjust your rate of contribution. You don’t have to go crazy—just a point or two can make a difference in the long run. (Even a half-point can be significant over time, thanks to compound interest!) And if your employer has a matching program, make sure you take full advantage of this—it’s essentially free money. Typically, these programs max out around 6 or 7 percent.
It’s good to know what your credit score is and how it tracks throughout the year, so take a peek regularly (ideally once a month or, but at minimum, once a quarter). This can also help you spot any errors. This is crucial, because errors—or, worse, identity theft—can tank your credit score undeservedly.
If you spot anything amiss, dispute the errors immediately in effort to improve your credit score and get back in good standing. You’ll be glad you did when it comes time to apply for any loans, including a car lease or a mortgage.
Here’s where another Money Date comes in. At least once per quarter, set a formal check-in date. This serves as a deadline of sorts, so you can celebrate progress and reevaluate your plan if you’ve experienced any setbacks. Remember: Celebrating your wins is just as important as making necessary adjustments.
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