Three Ways to Improve Your Relationship with Money in 2022
- Start 2022 off the right way by organizing your finances and creating financial goals for yourself.
- Recognizing where you are in your financial journey can help you shift your money mindset and start forming excellent money habits.
- Maintaining good financial health requires simple steps and planning short-term and long-term money goals.
Now that 2021 has come to an end and 2022 has begun, it’s important to reflect on your financial situation. Personal finance is personal, which is why it is essential to have a good relationship with your money. The benefits of having a healthy relationship with your money, in the long run, include good financial and mental health.
A 2021 Financial Recap
The year 2021 was dubbed as the "year of the retail investor,” per the Wall Street Journal. In fact, “In the first half of 2021, new brokerage accounts opened by individual investors have already roughly matched the total created throughout 2020, hitting more than 10 million.” Many new investors realized that it has never been cheaper or easier to begin your investment journey.
On the other hand, many Americans are still just beginning to get their financial life in order. In fact, according to a recent survey, many Americans admitted they were still paying off their 2020 holiday debt. So, whether you’re just getting started on your investment journey, or working to pay down debt, we’ve got you covered.
The first step in making confident financial choices is to improve your relationship with your finances. Without this foundation, you can easily succumb to peer pressure and derail your financial fortunes.
Here are three simple tips you can use today to improve your relationship with money. This is based on one of my favorite quotes from tennis legend Arthur Ashe: "Start where you are, use what you have, do what you can."
Whether you are a beginner or a mini Warren Buffet, use this guide as a resource on your financial journey.
Start where you are.
This is different for everyone - the keyword in this sentence is “you.” All of us have different risk profiles and financial goals. The trick here is to drown out the noise and focus on what you already have in front of you.
Here are a few questions to help you get started:
- What is my credit score?
- What is my net worth?
- I want to purchase a home in the next 12 - 18 months. How much do I need to save for a down payment?
- What is the interest rate on my student loans?
- Do I have an emergency fund? If so, how long will it last?
- Am I spending money on wants or needs?
Use what you have.
You might have more in your toolkit than you think! What free resources are available to you? Talk with friends and family, or join an online community. You’d be surprised how many other people share the same questions as you.
Here are a few ideas:
- If you have a 401(k) plan, often the plan administrator provides lots of free tools and resources, and maybe even a complimentary consultation.
- Libraries are open again! Before you press "purchase" on Amazon, why not check and see if the book you're looking for is available at your local library?
- Google is your friend! Research is key! Remember to not take financial advice from just anyone. Only a certified professional financial advisor can legally give you advice.
- Learn money tips through social media. Follow @gocapway for financial content!
Do what you can.
Break down your goal into pieces, and commit to accomplishing one of them this week. Your goal can be as simple as: “This week, I will reset the password to the retirement account that I’ve long forgotten about.” Or, “I will commit to paying $10 towards my credit card debt.” The goal here is to establish a habit because once you do that, you can develop a financial plan.
The keyword in all of this here is “you.” Just because someone is sending all of their extra savings towards student loan repayment doesn’t mean this has to be the case for you! Make sure the action is tailored to your needs. It can be as simple as opening a savings account at a trusted financial institution.
By following this simple framework, you'll be on the road to improving your relationship to finances in no time and setting yourself up for investment success.
If you’re planning on improving your relationship with your money in 2022, share this article with a loved one!