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Written by CreditRegistry

Financial Resolutions you should be making in 2022

How can you reach your financial resolutions in 2022?

Every year, you promise yourself to save more money, earn more money or even begin to build your retirement fund as part of your financial resolutions for the year.

After you write down those awesome goals for the year and the kind of results you’d like to achieve, you may eventually veer off-road because, let's face it, life happens.

You feel like a failure, so you stop even trying. And it’s only April.

The problem isn’t that you didn’t have enough willpower. You’ve set beautiful goals, but you don’t have a plan on how to achieve them.

If you’ve got a New Year’s financial resolution in mind, you can help yourself when you stick to the SMART-goal strategy and be compassionate with yourself if you fall off the horse at any point.  So, when mapping out your financial resolutions for 2022, always make sure that they are SMART - Specific, Measurable, Actionable, Realistic and Time-Bound.

What you need to know about Financial Resolutions

Financial resolutions are savings, investment or spending targets you hope to achieve over a set period of time. The stage of life you’re in usually determines what type of goals you wish to achieve.

So, it’s important to figure out what matters to you and decide accordingly. If you don’t have a compelling reason to make the effort to do something, chances are you won’t stick around long enough to establish a habit.

“If you aim at nothing, you will hit it every time.”

- Zig Ziglar

How to reach your financial resolutions.

Apply a SMART- goal strategy. That is, make certain your ambitions are Specific, Measurable, Achievable, Relevant, and Timely. SMART.

Monitor your progress. Make sure that you are hitting certain benchmarks. If not, take some time to re-evaluate what went wrong.

When you figure out what matters to you and set goals along your values, it is important to come up with a “why” for each financial resolution you make.

Once you’ve written down a “why” for each financial resolution you’ve made, revisit them each month to make sure they still hold true. If not, come up with new compelling reasons to help you stick to them.

Now, let’s dive into five resolutions you can take with you into the new year using the SMART-goal strategy and hopefully start your journey towards greater financial well-being!

1. Review/Create a budget

Setting up a budget -- and following it -- may not be the most exciting thing you do in 2022. But it's an essential step on the road to managing your money.

Without a budget, you might lose track of how much you're spending on different expenses. And that could make it difficult to meet other goals, like saving for emergencies or paying down debt.

For some, a budget can feel constricting, but tracking your spending is a useful tool to help you understand where your money goes each month. A clear budget can help you set guidelines for what you can afford to spend and help you identify areas where you could cut back.

Start by writing down all your fixed expenses, such as rent, food, cell phone, and savings. Then you can see how much money you have leftover for flexible expenses, such as restaurants, clothing and entertainment costs.

Then take some time to review your budget. This is an exercise where you can get real about non-essential expenses that you can cut down on. For instance, are you subscribed to 4 or more non-essential services? This is a good time to make sure you’ve canceled any trials that expired, or evaluate if you can get better subscription rates.

Once you’ve come up with your new and realistic budget for 2022, you can then figure out just how much you can comfortably allocate towards your goals. Don’t choose an amount that is so large that you’re straining yourself and not having any room for fun in your budget at all. Remember, we’re in this for the long haul. So, pick a number that feels good to you and leaves enough room in your budget so that you can live an enjoyable life.

Your budget helps you get a strong handle on what’s coming in and what’s going out, so you can work it to address your goals.

2. Build an emergency fund

If this is the only goal you achieve this year, it is definitely worthwhile! An emergency fund could be the one thing that bails you out when unplanned bills strike or your income takes a hit. Having an emergency fund is an essential building block that will set you up for success for meeting the rest of your financial goals. Many Nigerians don’t have an emergency fund, and building one will boost your financial confidence!

Ideally, you should have enough money in your emergency fund to cover three to six months of essential living costs. Start off with a smaller goal of saving up 1 months’ worth of living expenses. Once you’ve met that goal, set a second goal of saving up 3 months’ worth. Ultimately, you’ll ideally want to work your way up to 6 months’ worth of savings. The idea of an emergency fund is to keep it liquid.

If you don't have a complete emergency fund, building one should be your top priority for 2022. If you have savings but think you could use extra protection, then boosting your emergency fund -- say, from three months' worth of living costs to five months' worth, is another great goal to aim for.

3. Start investing

Once you’ve built up an emergency fund, investing is another financial resolution to aim for. Yes, it can feel safer to save in a place where you can see it. However, the interest rate on most savings accounts isn’t high enough to compete with inflation. To really put your money to work, investing is the key.

Your investment profile will depend largely on many factors. Two important ones will be your long-term financial goals, and whether you are risk-averse or not. You can build a portfolio with the help of a financial advisor, or you could sign up for a user-friendly investment platform while you educate yourself with authentic resources.

4. Improve your credit score

There are several ways you can improve your credit score. A great way is to pay bills on time and in full (which may include setting up autopay), pay off debt, limit how many new accounts you open and cut back on spending.

If you are yet to get started on your credit journey, this is an important financial resolution for 2022 . Begin to learn about what credit is and why it is important, so you can start your journey of using credit responsibly. This is important as good credit gives you access to the capital, options, opportunities and leverage you need to take control of your financial future.

It’s important to regularly check your credit report so you can spot fraud early and ensure the correct information is reported to the credit bureaus.

You can also access one free credit report every twelve months from CreditRegistry, at creditregistry.ng.

Article written by CreditRegistry

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