What are your financial resolutions for 2022? | Milton, MA Business Listings, Business Directory | Milton’s time
As you know, 2021 has been full of challenges. We were still feeling the effects of the COVID-19 pandemic when supply chains closed and inflation rose. So if you are like a lot of people, you might not regret seeing the year end. But now, it’s time to envision a brighter year 2022. And on a personal level, you might want to set New Year’s resolutions. You may decide to improve your health and diet, and maybe learn new skills, but why not make some financial resolutions as well?
Here are some ideas to consider:
Prepare for the unexpected. If you haven’t created an emergency fund yet, this might be a good time to start. Ideally, you would like to have three to six months of living expenses in this fund with the money held in a low risk liquid account. (If you are retired, you may want your emergency fund to contain up to a year of living expenses.) Once this fund is established, you may be able to avoid tapping into long-term investments. term to pay in the short term. long-term, such as expensive home or auto repairs or large medical bills.
Boost your retirement savings. The pandemic has caused many of us to re-evaluate our ability to eventually enjoy the retirement lifestyles we envisioned. In fact, 33% of those planning to retire soon said they started contributing even more to their retirement savings during the pandemic, according to a study by Age Wave and Edward Jones. This year, if you can afford it, increase your contributions to your IRA and your 401 (k) pension plan or other employer-sponsored pension plan.
Reduce your debt. The less debt you have, the more money you will have to support your lifestyle today, save and invest for tomorrow. So, this year, resolve to reduce your existing debts and avoid incurring new ones as much as possible. You can motivate yourself by measuring your progress – at the start of 2022, record your total debt, then compare that number to your debt at the start of 2023. If the numbers have come down, you’ll know you were making the right choices.
Don’t overreact to headlines. A lot can happen in a year. Consider inflation – it skyrocketed in 2021, but it may well subside in 2022. If you had changed your investment strategy last year to deal with rising inflation, should you then change it again when prices drop? And inflation is just an event. What about the evolution of interest rates? What about the new legislation coming from Washington? And don’t forget about extreme weather events, such as forest fires and floods. Some or all of these events can affect the financial markets in the short term, but it just doesn’t make sense for you to keep changing the way you invest in response to the news of the day. Instead, stick to a strategy that fits your goals, your risk tolerance, and your time horizon. You may need to adjust this strategy over time, in response to changes in your own life, but don’t let your decisions be dictated by external events.
These aren’t the only financial resolutions you can make, but following them can help you develop positive habits that can help you face the future with confidence.
This article was written by Edward Jones for use by Joe Parlavecchio, CFA, CFP®. Visit https://www.edwardjones.com/joseph-parlavecchio for more information.
Edward Jones, member of the SIPC.