Setting The Right Financial Goals for 2022
Every single year, millions of people make two very popular New Year resolutions. The first one is to lose weight and get fit… and the second is to make more money and their finances in order.
The truth of the matter is that most people will give up on their resolutions within the first three weeks of January. The few that remain often drop off by March… and their lives never change.
There’s a reason for this – making resolutions and setting goals is the easiest part of the process. Following through is what separates the winners from those that don’t achieve their goals.
In this article, you’ll learn how to set financial goals for 2022. In fact, the process below can apply to any year. The method is evergreen and will work forever. Let’s get started.
- Assess your financial situation
Below are some important questions to ask yourself…
- Are you in debt?
- Are you struggling to make ends meet?
- Do your expenses exceed your income?
- Do you want to invest but have no idea how to?
- Do you wish to earn more?
Just by answering these questions, you’ll have a better understanding of what you need to do to improve your financial situation.
- Settle ALL outstanding debt
If you’re in debt, your goal should be to settle off all your debt, especially revolving credit such as credit lines, outstanding credit card bills and so on.
Debt is insidious and will sabotage all your financial goals if it’s left to fester and grow. Make a debt repayment plan and pay off your debt.
- Build an emergency fund
Even if you’re in debt, you should put aside a small sum every month to build an emergency fund. It’s not the amount you save, but the habit which matters. Some people’s budget may be so tight that all they can set aside is $10 every two weeks.
If that’s the case, go ahead and save that $10. Over time, you’ll have a $100 or so. Just having this little bit extra will subconsciously shift your mindset. You’re no longer broke.
You’d be amazed to discover that when you’ve always been living paycheck to paycheck, just having a little bit extra socked away in a safe place can give you peace of mind and hope.
So, save whatever you can regularly. You may even wish to take on a second job just to build an emergency fund. Ideally, you want at least 6 months’ worth of income saved up to tide you through tough times.
- Become financially literate
Most adults lack financial literacy, and it’s NOT their fault. Managing your budget, investing in stocks, calculating taxes, managing debt, etc. are crucial life skills. But we’re not taught these skills in school.
That’s because the system is designed to keep people clueless and working like slaves while being perpetually in debt. The key to finding financial freedom is to become financially literate.
While you don’t need to master actuarial science or macro accounting, you do need to know how interest is charged on your credit cards and be savvy about other personal finance topics.
If you wish to invest in stocks, you’ll need to read books on investing so that you can proceed cautiously, instead of plunging in blindly and losing the shirt off your back.
Countless people never spend time educating themselves on finance and just follow ‘insider tips’ given by family members or friends. They’re lured by the promise of quick profits, and end up losing their money.
Even if you’re in debt and don’t have the money to invest right now, you can still borrow a few personal finance books from your library and read through them. This is a dry topic, but after a while, you’ll get the hang of it. Now, you’ll be ready to invest.
Make financial literacy one of your goals for 2022.
- Start a side hustle – a small part-time side business
The internet has made ordinary people into millionaires. Gone are the days when you needed a lot of capital to start a brick and mortar business.
These days, with a few hundred dollars, you could start an online business and be making 4 to 6 figures a month – once you get it all to work. There are girls earning 5 figures a month on OnlyFans! This is an extreme example, but you get the point.
Never has there been a time in history where it has been this easy to become an entrepreneur. The internet has put wealth within the reach of most people who are willing to do the work and take a chance on themselves.
Set a goal to create a secondary income stream for yourself, over and above what you’re currently getting paid at your day job.
The extra money you earn will not only help you to pay off your debt faster, but you’ll also be able to set aside money to invest for retirement and so on. There’s immense potential for generating money online.
- Create a financial plan
Once you’ve assessed your financial situation, take a piece of paper and write down the numbers. Make a budget and a plan. Decide how much you’ll pay towards debt, how much you’ll save… and if it’s possible to set aside money to invest.
You MUST have a financial plan to follow – or you’ll end up spinning your wheels and losing your way.
- Start investing
Once you’ve settled most or all of your debt, and you have some money to invest, you’ll need to assess your risk level. Generally, the younger you are, the more risk you can handle. Time is your ally and you can recoup any losses.
Older people who need money for retirement will be wise to put their money in stable investments such as bonds or S&P 500 ETFs.
Risk and volatility is NOT for you… unless you have money to burn and don’t mind risking loss to make more money.
Before investing in stocks, bonds or index funds, do your research and see which vehicles of investment are best suited for your risk appetite. Some people prefer stocks while some prefer index funds… and others prefer crypto.
There’s no right or wrong answer here. Only what’s right for you. It’s important to plan your approach wisely.
Once you’re ready, start investing. Go slow, learn the ropes and slowly diversify your portfolio and scale up.
Ultimately, you’ll want to reach the end of 2022 totally debt-free, with an emergency fund, a lucrative side income and some investments. This is an ambitious goal, especially if you’re laden with student debt or other commitments.
Nevertheless, set the ambitious goal and work towards it with all your heart and might. You’ll be amazed by how much you can achieve when you’re focused. Get started on your goals today.
“Financial success, as well as most success in life, is not about perfection. It’s about direction.” – Donald Lynn Frost.