6 smart financial steps to kick off 2022
Make sure you take care of it as soon as you can.
- The start of a new year is a good time to improve your finances.
- Tasks like building up your emergency fund, paying off vacation debt, checking your credit report, and more, will help you end 2022 on a healthier financial footing.
Whether you are excited about the prospect of a New Year, the start of 2022 means you have a great opportunity to take charge of your finances and change your image in a positive way. Here are six key steps to take as 2022 shifts into high gear.
1. Build or increase your emergency fund
Without money in the bank, you could instantly find yourself in debt the next time you’re faced with an unexpected expense that you can’t defer. And if you lose your job, you could find yourself in dire financial straits without an emergency fund.
That’s why now is the time to assess your savings account balance. If you don’t have at least three months of essential bank expenses, make an effort to increase your emergency fund. You can do this by cutting back on your expenses or giving yourself a little helping hand to increase your income.
2. Come up with a vacation debt repayment plan
It’s not uncommon to end the holiday season with a heap of debt. If this is the boat you are in, the sooner you pay it off, the less interest it will cost you.
You can pay off this debt pretty quickly by increasing your income with a second job and changing your budget to free up money. You can also consider making this debt less expensive, including doing a balance transfer if you qualify for an attractive offer.
3. Make your mortgage cheaper
Chances are, housing is your biggest monthly expense. If you are a homeowner, it is worth considering refinancing your mortgage.
At present, the refinancing rates are very attractive. If you are able to lower the interest rate on your home loan, your monthly payments could go down, freeing up more money for other purposes.
4. Check your credit report
Your credit report is an overview of your borrowing history and is an important document to read, especially if you plan to apply for a large, short-term loan, such as a mortgage. Normally, you are entitled to a free copy of your credit report once a year from the three major reporting bureaus – Experian, TransUnion, and Equifax. But right now, credit reports are actually free on a weekly basis until April, which means you have plenty of options to access yours without spending a dime.
5. Take action to increase your credit score
The higher your credit score, the more likely you are to qualify for a mortgage, apartment rental, or credit card offer. If your credit score needs improvement, make a plan to improve it. This could involve paying off some existing credit card debt, correcting credit report errors, and finding ways to be on time with all of your bills.
6. Decide if it’s time for a new job
Your work has a huge impact on your financial situation. If yours isn’t paying you adequately, it might be time to find a new one.
Right now there are plenty of jobs available, and January in particular is a good time to look. In fact, hiring budgets are often renewed at the start of the year, which gives employers more leeway to offer generous salaries. Do some research to see what you deserve to be paid based on your role (or role you’re looking for), location, and level of experience so you know what to ask for.
Even if you’re not the type to make New Year’s resolutions, it’s worth managing your finances well at the start of the year. These smart gestures are worth checking out on your list, and the sooner you start, the better.
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