9 ways you can improve your finances and well-being in 2022

The mind-money connection

No matter what the year holds, adopting some timeless tactics can help improve your financial (and mental) well-being.

Much like 2020, 2021 didn't exactly stick to a predictable script. Unprecedented housing price increases, stock market volatility, and rising inflation were just a few of the economic events we experienced—and these events affect both your finances and your well-being. But if the recent past has taught us anything, it's that preparing for the unexpected can offer us not only peace of mind, but even hope.

Want a fresh financial start? Or simply looking to set new goals? If you follow these tips throughout 2022, you might be amazed at what you can accomplish in a year. 

1. Build your emergency fund

What will you do if you encounter an unexpected expense or loss of income? Having even $1,000 stowed away can help you create a financial safety net. And, just as important, knowing it's there can do wonders for your peace of mind. Create short-term savings goals and practice saving every week or month. Put it in a separate savings account, and soon enough, you’ll see you’re making progress. For a longer-term goal, target having at least three months’ worth of living expenses saved in your emergency account.

Read more: Grow your confidence by knowing how much to save for emergencies

Make saving even easier by automatically paying yourself first via direct deposit or automatic transfer. Every little bit helps. 

2. Create a budget based on your priorities

Have your spending or saving habits changed in the past year? Perhaps you’re becoming more intentional with your spending, or you’re looking to find room in your budget for new hobbies—like painting or working out with a personal trainer. Good news: You can afford to do the things you want as long as you budget for them. Take a good look at your spending habits to determine where your money is going. Then, use those insights to create a spending plan that will not only help you reach your goals, but also reflects your priorities and values.

Read more: How to spend money mindfully with values-based budgeting

3. Pay down debt and raise your credit score

One in five Americans overspend on their credit cards.1 Some debt is considered “good debt,” like student loans or mortgages, but you should work to pay off consumer debt, like credit cards, as soon as possible. Paying off outstanding balances—especially if they’re high-interest—is one of the quickest ways to improve your credit score. If you’re managing multiple debts, consider different approaches you can take to pay them down, like the “snowball” or “avalanche” methods.

Read more: 3 steps to help you ease debt stress

4. Insure yourself

An emergency fund is a great first step to prepare for the unexpected. But making certain that you’re properly insured can be just as important. Gain a basic understanding of the fundamental types of insurance—like life, homeowners, renters, auto, flood, and disability coverage. Shop around to make sure you’re not overpaying for you and your family’s needs, and work with accredited agents to get the appropriate coverage.

If your will isn’t already in place and up to date, take time this year to meet with an experienced lawyer or estate planning attorney to prepare or update your will so you can make sure your loved ones are cared for no matter what. 

5. Invest for future you

More than half of working Americans feel that they’re not making enough progress toward saving for retirement.2 For the new year, check your retirement accounts and investments. If you aren’t already investing for your retirement, research options like opening an IRA or starting a 401(k) with your employer. If it’s available to you, taking full advantage of employer matching on your 401(k) can have a significant impact over time.

Read more: 5 key retirement planning tips from real retirees

Aim to put at least 10% of your pretax income in your retirement savings—or more if you can afford it or need to catch up. One of retirees’ most common regrets is that they didn’t start saving earlier. 

6. Handle your housing expenses

Many would-be homebuyers were priced out of the market in 2020 and 2021. Nobody can predict exactly what’s going to happen next with the housing market, but this could end up being a better year to purchase a home if supply can catch up with demand and interest rates remain attractive. If you’re a first-time homebuyer, be sure you have the basics covered first. Consider renting still if you don’t have at least a 5% down payment and a credit score over 700, or if you aren’t likely to live in the home for at least five years. And if you own a home already, consider refinancing your mortgage to take advantage of the current interest rates, if it makes financial sense to do so.

Read more: Buying a home? Key things to know

No matter if you own or rent, a general financial best practice is to spend no more than 30% of your take-home pay on your total housing costs. 

7. Take steps to increase your income

Whether you’re currently looking for a job, hoping to score a raise, or thinking about turning a hobby into an income-generating side hustle, increasing your take-home pay is another way to improve your financial confidence and well-being. You can increase your income potential by developing your skills, seeking support services, and networking with a focus on professional relationships.

Career advancement isn’t only about negotiating a higher salary, though. While not everyone can score the job of their dreams, you can still prioritize your own happiness by aligning your career choices—like what you do or who you work for—with your personal values. 

8. Remember to give back when you can

There are so many reasons to give back—such as the science that says giving is actually good for you. In the coming year, make giving back one of your goals. There are plenty of ways to keep paying it forward year-round, whether it’s a charitable donation or sharing your time, talents, and resources to make the world a better place. Ask a friend or family member to get involved, which can make giving back a bonding experience with those who are important to you, too. 

9. Tend to your mental well-being

Undoubtedly, 2021 was a whirlwind of a year. If you haven’t been paying attention to your mental health, it may be time to start. Before and after the new year, take some time to rest and recharge. Talk to a therapist if one is available to you, or chat with a friend or family member you trust. Take a few minutes for your mental health each day—going for a walk, meditating, or sipping coffee or tea on your porch with no distractions can all be beneficial for the mind.

While this coming year will look different for everyone, the more of these tips you follow, the more confidence you’ll gain—and the less you’ll have to worry about. Even focusing on just one or two of these financial resolutions for the year can help relieve stress and get you closer to your goals. 

This content does not constitute legal, tax, accounting, financial, or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial, or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.