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How To Manage Your Finances In 2022

by Amarachukwu
How To Manage Your Finances In 2022

If adulting has taught the average individual anything, it is the importance of adequate financial management skills. It doesn’t matter if you have a degree in any business or finance-related course or not. It is a universal survival skill.

So many people have learned the hard way, the disadvantage of not being able to manage their finances as they ought to. While some were lucky to bounce back, others weren’t so lucky. Like every other mistake in life, you don’t have to wait till you make mistakes in your finances before learning a lesson or two about it. You can learn from others and use the knowledge to your advantage.

While it is unarguable that money cannot buy happiness, we cannot deny the fact that the ability to manage it effectively can bring you a sense of security, confidence, and tranquility. Two facts can coexist.

Those who have been honest with themselves have agreed that failure to rightly manage their finances has placed their lives on a financial cliff, with few surviving it.

This was also revealed in a survey report where 25% of Americans confess that they always worry about their finances. In another report, 37% of the respondents said that they wouldn’t mind solving a $1,000 financial problem with a credit card.

It is however important to state that managing your finances does not automatically translate to more income, nor does it guarantee an easier life, but it sure gives you an avenue to focus on other important aspects of your life and strategize on growing your finances.

As difficult as adequate finance management may sound. The good news is, it is not a herculean task. Although, we must note the fact that it is more than earning in multiple figures.

Adequate finance management skill is capable of affecting your credit score- which has a lot to do with your finance in its entirety. If you live from paycheck to paycheck among other symptoms that depict financial struggle, you may need to take a critical look at your money management structure.

The sad truth is, these skills are not learned in the classroom. So, it is possible to have multiple degrees in courses relating to finance and do a poor job of actual finance management in real life. Also, consider the fact that real-life scenarios are usually different from the classrooms.

Tips to help you manage your finances.

1.       Take stock of your financial situation at the moment

This may be difficult to do at first, but it is quite important. Before you embark on a journey, you must start from a point. This is your starting point.

This requires total objectivity. You must be brutally honest with yourself to know your actual current financial situation. That way, you’ll be able to identify the lapses in your previous approach and come up with an effective way to tackle them and achieve your financial goals.

2.       Plan for your money

As you work and earn, what do you intend to do with your money? You must have a plan for your money. You don’t just live every day as they come, swiping your cards to pay for random items. They must be adequately planned for.

This tip may also make you say no to some expenses. Especially when they are not that important at the moment or can wait. Remember, failure to plan is planning to fail.

3.       Set the right goals for your money

Setting goals- short-term and long-term alike is critical to managing your finance and ultimately attaining financial independence.

 As you set goals for your future, you must also ensure that they align with your financial strength. You don’t set a million-dollar goal when you are worth less than a thousand dollars. That will be like building a castle in the air.

Setting the right goals for your money is also important as a morale booster for you. This is because when you set and meet these goals, you get used to achieving targets and it becomes easier to set dreams bigger.

4.       Review your financial performance often

Some people are guilty of being intentionally blind towards their financial performance until special occasions such as trying to apply for a loan. This ought not to be so.

Your budget, earnings, expenses, goals, and other activities that affect your finances must be reviewed often. This will help identify any loophole that may pose a threat to adequately managing your finances. Remember that you cannot adequately tackle a threat that you cannot identify. And in some cases, such threats can only be handicapped when they are figured out early enough.  

5.       Reduce your expenses

This tip is probably a universal tip in securing your finances. When you critically take a look at your expenses- both recurring and those that come up at intervals, you would always identify an expense that you can do without, but is gulping a significant part of your income.

These expenses may not consume a bulk of your earnings at once. Their prices may not be much, but when you calculate them into a lump sum, you’ll discover that a fortune is thrown away through those avenues.

Reducing your expenses is filtering your needs from your wants and prioritizing the former over the latter. When it comes to reducing your expenses, no amount is too small.

6.       Critically look at your income

This tip may not be taken seriously, but it is an important tool to being able to manage your finances. Sometimes, people only focus on their gross earnings. They don’t pay attention to what they get after taxes and other deductions have been made.

When you take a critical look at your earning, then, you’ll be able to identify how far behind your income is against your goal. This also encourages you to seek avenues to earn more like negotiating for a salary increase, taking your investments seriously to earn passively, as well as other active ways of earning like picking up a side hustle or working multiple jobs.

7.       Plan to clear your debt

We cannot overemphasize how burdensome debt can be to your finances and entire life. it affects your budget for the present, affects your savings for the future, and is a threat to your life after retirement.

If you can live without it, it is always advisable to have a debt-free life. but if you must pick up loans, do well to pay them off as soon as possible.

Aside from affecting your credit score, a lingering debt is a dark cloud hovering over your finances. It makes you lose focus and can affect your plans and work toward a financially secured future.

8.       You must understand your credit score

Your credit score is an integral part of your financial life and must not be taken with levity. It is a 3-digit number that can make or mar the financial opportunities that come your way in the future.

A good credit score has been the determining factor for the financial growth of many, just as it has been the reason some were disadvantaged.

When you have a good credit score, lenders tend to give you money quickly with terms that are favorable to you. These terms like reduced interest rates can amount to huge figures at the end of the day. So, you see yourself saving more, just because you have a good credit score.

9.       Prepare for emergencies

This is probably one of the best ways to manage your money. This is because emergencies have a way of happening at the wrong time, disrupting plans, and negatively affecting your savings.

But when you have an account where you put emergency funds, for example, you are less shaken when those situations come up. If you are lucky, what you have saved up may be enough to tackle such emergencies. Where it is not enough and you need to raise more funds to cover for the emergency, the pressure is reduced because you are not looking for the entire funds, but the balance. Either way, it is a win-win situation for you.

10.   Plan for huge expenses

It is not advisable to pay for expenses that are considered ‘large’ without planning for them. Doing this may dig a big hole in your account and may be discouraging.

When you have big spending to do, you may want to consider planning months ahead and setting an allocated amount aside for the purpose. When you do this, it will be easier for you to doll out such huge cash without necessarily thinking about it as you have broken it into bits that are easier for you to clear.

11.   Get the best deal before you pay

When you are making a purchase like getting a car, for example, do not just settle for whatever deal the retailer offers you. Take your time and compare prices, visit competitors and settle for the most favorable offer.

This may require that you dedicate a lot of time, but it’s worth it. If you want to effectively manage your finances, you will not just pay whatever the first person asks for. Rather, you will go ahead and talk to other people, compare prices and identify the most favorable term for you.

12.   Plan for retirement

No matter how young you are, retirement is closer than you think. All it takes is a couple of years and boom, you are retiring. It is never too early to plan for your retirement.

When you plan adequately and save for your retirement years, you are able to live at peace in the present and the future when you finally retire.

If you are lucky to have the advantage of matching funds by your employer, that’s great! If not, consider a Roth IRA contribution.

13.   Strive to know more about finance management

For you to effectively manage your finances, you must dedicate yourself to learning, unlearning and relearning. Because the more you know about financial management, the better.

Submit yourself to materials and content that will improve your knowledge in money management. New knowledge does not hurt. Rather, it helps you make the right decision.

You may have been used to a financial management approach that no longer works. But when you are willing to learn every day, you’d be abreast of the current ways of getting the needed results.

14.   Get an accountability partner

As humans, telling ourselves the bitter truth and holding ourselves accountable may be a bit difficult as we have our sentiments. Aside from intentionally ignoring some red flags, some of us may not honestly catch some necessary angles that we need to do better financially. This is why an accountability partner is a great hack.

Your accountability partner can be a friend, family member or professional finance manager or advisor.

They must be someone independent, that you can listen to when they advise you, and someone you can talk to freely.

In a world where talking about finances is gradually becoming taboo, when you have these conversations, that may be what you need for better insights on managing and improving your finances.

How To Manage Your Finances In 2022

Your accountability buddy or partner should also be someone that shares your dream and aspirations with you, and they must be honest about it. Not someone that throws all your concerns out of the window or that pretends to care about your growth but doesn’t.

15.   Give back

Some people may not expect to see this tip as a key in this topic, but it is a great way to manage your finances. Remember what is said about givers, they don’t lack.

The universe has been hacked to favor those that will distribute love more. So, as you get your acts right, look around you, there is someone or something that you can focus your energy on and help make the world a better place, one act at a time. After all, the world is toxic enough. There can’t be too much kindness.

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5 comments

How To Manage Your Finances In 2022 | blogs | ... November 27, 2021 - 6:29 pm

[…] In our previous post, we talked about tips for getting your finances in 2022.…  […]

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