6 Financial Tips for a Prosperous 2022

With 2021 behind us, we have a lot to think about in the next few months. And as we turn over a new page, we are filled with hope to get nearer to our goals.

Sure, you have written down your new year’s resolutions. You want to be healthier, kinder, and wealthier – we commend that. Setting goals is a big part of planning. How often, though, do we establish goals that we never achieve? Without a strategy for achieving them, goals are nothing more than wishes, especially when we’re talking about finances.

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Why not leverage the start of the year to get yourself set up for a financially bright and healthy future? Don’t worry, we’re here to give you some useful financial tips to give you a head start in 2022.

Why do you need financial tips

Perhaps you’re asking, “Why bother changing the way I save money and organise my finances this year?”

Have you realised that things are getting more expensive compared to 5 years ago? For many of us in Singapore, financial stress is a major issue. The growing cost of living in one of the world’s most expensive cities, along with a lack of affordable housing and restricted access to education, has put many people in financial distress.

See also: Building Your Wealth Assets in 2022

It doesn’t only affect our pockets, but it also takes a toll on our mental health. Just look at the statistics of people suffering from depression over the past few years. It's not just about the stress over medical bills, schooling, or housing. It’s the daily necessities even that slap us the truth every time.

You know we can’t rely on the government to solve all the socio-economic issues the world faces. We have to take the initiative to help ourselves and help others, too.

So here are 6 financial tips you can heed to be in a better financial position this 2022.

6 financial tips you should heed

Managing our finances doesn’t start nor end on just saving money. It goes way beyond budgeting your monthly income and paying your bills on time. Read more for tips you might have previously overlooked.

1. Review your financials

A step in financial planning that most of us take for granted is reviewing our financials. As it’s the start of the year, do some reflection.

So far, what have been your successes over the last 5 years? How much have you earned? How well did you perform during the last two recessions?

Discovering your personal growth curve and recognising where you excel and where you tend to lose value could assist you in making smart financial decisions.

2. Create and stick to your budget

Creating and sticking to the correct budget can make all the difference in your overall performance in achieving your financial objectives. Start to create a budget that matches your cash flow and lifestyle requirements after carefully examining your household income and spending.

See also: 5 Money Management Tips You Should Remember

3. Increase the value of your savings

One of the most essential lessons we've learnt over the previous several years is the importance of having a financial cushion. When it comes to splitting your income, the 50-30-20 ratio is a good starting point.

You allocate 50% of your budget to living expenditures such as rent and groceries, 30% to entertainment, and 20% to savings. If 20% of your income seems too much, start with 10% or 15%. Small payments to your savings account over time might add up to a lot of money.

If you’re in a better financial position this year and would want to grow your savings, it could be the best time to start investing. There’s a lot of opportunities to invest in Singapore, including properties, gold, stocks, bonds, and cryptocurrencies.

4. Pay off your credit card bills

People tend to overspend when using credit cards. This is because spending money using a credit card is simple and convenient, and you avoid the "pain" of money leaving your pocket. But when small payments start to pile up, you would be shocked to realise that you have spent much more than you can pay for.

While there’s no harm in using credit cards, it is important to monitor your bill and make sure you don’t accumulate debts. Set a goal for yourself to pay off your bill by the middle or end of the year. Begin by paying more than the minimum payment, religiously monitoring your credit card usage, and discovering ways to reduce your spending.

5. Create or add to your emergency fund

If you haven’t yet completed this task, it’s high time to tick this off your checklist. Your emergency fund is equivalent to you taking care of yourself. It will ensure you have the cash to spend when unfortunate situations occur. Typically, we recommend you secure an emergency fund equivalent to 3 to 6 months of your expenses.

If it’s a bit too much for you, you can begin with simply $100 or $200 each month, and just add to it if you have spare cash, maybe a bonus pay or cash gift.

6. Increase the number of skills on your resume

Increasing your worth and earning potential through improving your skills would ensure that your financials are still healthy even when the next recession happens.

To do this, you can explore online learning platforms and acquire new skills, especially those needed in today’s digital age. All it takes is a commitment to improving yourself and you’ll surely find the opportunity to do just that.

For more tips on how to grow your money this 2022, join our FREE online masterclass on creating passive income for families.