Here are five money moves everyone should make in 2022 to help take the stress out of building their wealth. Some of these will save you money, which will allow you to put more momentum behind your wealth building.
Increase Retirement Plan Contributions
Whether you are contributing a little or a lot, now is an excellent time to increase your retirement plan contributions. Good news from the IRS for workers, you can now contribute $20,500 to a 401(k) as an employee. For small business owners, the total contribution limit for a 401(k) is $61,000 in 2022. If you are age 50 or older, you can also make a $6,500 catch-up contribution. For high-income earning business owners, contribution limits to a Cash Balance Plan have increased from $230,000 to $245,000 in 2022. This is in addition to the 401(k) contribution limits.
At the very least, you should be contributing enough to your 401(k) to get the full employer match. This is like getting free money or a raise from your employer and not having to pay taxes on the income this year.
Check Your Recurring Bills-Call for Better Deals
Take a few minutes and review your monthly bills. What recurring services are you paying for that you aren’t really using? If you aren’t using an app or streaming service, cancel it.
For other services like internet, cable, cell phone, home phone, and so on, you likely had some type of discounted price for service when you originally signed up. If this initial promotion has ended, call your provider, and see if they have a client retention bonus or pricing. You may also want to consider switching providers to save money each month. Last year, I was able to upgrade my iPhone essentially for free. I just had to pay the tax. Of course, the downside is I am tied to my cell phone provider for two more years.
I do this process each year, and each year I’m still able to save money. You may be able to save a few hundred dollars per month by negotiating all your services. That might translate into thousands of dollars per year in savings.
Increase Saving to Your Investment Accounts
I am a huge fan of building wealth and making smart financial decisions. It is also my job as a financial planner to help people reach financial freedom. Everyone should be saving money beyond their retirement accounts. If you haven’t already done so, open a non-retirement investment account and set up an automatic contribution each month.
If you are wondering where this extra money to save each month will come from, read the last tip. Hopefully, you were able to cut a few hundred dollars per month from your budget by negotiating or canceling your recurring bills. By saving just $300 per month for thirty years (assuming a 10% return), you could have a whopping $590,000.
Check Your Mortgage Rates
Mortgage rates have been near record lows seemingly forever. With sky-high real estate prices these days, even a small decrease in your mortgage interest rate can save you a bundle over the lifetime of your mortgage. Interest rates are expected to creep up in 2022. So, take a few minutes, check your current interest rates. (If you are on an adjustable-rate mortgage, check for how much longer your rate is locked, and see if you could save money by refinancing.) Or, perhaps, extending your mortgage to a new 30-year mortgage could lower your payments, which would allow you to supercharge your savings for other goals like retiring early or even buying a second home.
Automate Your Bill Paying
Part of the financial planning process is to help you reach your goals faster and easier. One way to make tracking your finances easier is to automatically pay as many of your bills as possible. Set up auto-pay for all of your bills that you can. Have your paycheck direct deposited.
For those who are willing and able to pay off their credit cards each month, pay as many bills as possible with a credit card that earns miles or points. Obviously, you earn miles or points, but it also helps track your monthly spending. You only have to pay the credit card bill once per month, rather than each bill as it’s received.
How much do you think you can save this year? Think of how fast you can reach your financial goals if this money is put to good use. Or, perhaps, you just use the savings for that bucket list vacation you haven’t been able to take due to the past year’s travel restrictions.