2022 is well underway, and it’s time to check in on our resolutions and goals. If your goal was to save more money, we are here to help give you a little extra motivation. With prices going through the roof and inflation creeping higher and higher every day, it’s never been more important to be smart with your money.
There’s still time this year to get ahead on your finances and make 2022 your best financial year yet.
We say it all the time, but it always rings true. Creating and sticking to a budget is one of the most important things you can do for your financial well being. Whatever your goal may be, whether it is to pay off debts, start a college fund, or save for a vacation, having a budget is the best way to achieve your financial goals. So here is our quick and easy guide to creating a budget:
Fixed expenses are your expenses that do not change from month to month. They will not change from month to month and can include your rent or mortgage, car payment, cable bill, trash collection, subscription services, internet, student loans, etc. Once you have located all of your fixed monthly expenses, log them in a spreadsheet.
Variable expenses are your expenses that do change from month to month for a variety of reasons. They might include your groceries, electric bill, parking fees, dining out, entertainment, and home repairs. Try to get an estimate for how much these categories cost you from month to month. Looking at your past credit card bills or receipts can help you get an approximate gauge. Then enter them on your spreadsheet as well.
Determine what your monthly income is. What is your take home income (post tax and post deductions)? Add in any extra income you may have. This could include a side business, dividends, or rent that you collect. Enter these in your spreadsheet in a separate column.
How does your incoming money match up with your outgoing? Are you bringing in more than you are spending? In that case, look to see where you can invest this extra money. But what if you are spending more money then you are bringing in? If this is the case, look for places to cut your expenses. What subscription services can you cancel? Can you cut back on entertainment and dining out? Look for any and all places where you can sacrifice to make some changes. Little cuts here and there can add up to big savings in the long run.
According to a recent CNBC study, the average American household with debt owes $155,622, or more than $15 trillion altogether. These debts include mortgages, car loans, credit card debt, and student loans. With numbers this large, it’s important to prioritize paying off your debts sooner rather than later.
Prioritize which accounts you should pay off. Credit card debt should be first on your list of debts to tackle, as the interest rates tend to be exceedingly high and these debts have a tendency to snowball. Commit to making additional payments whenever you can (and maybe even think about building an extra payment into your budget).
Refinancing is when you pay off an existing loan with a new loan, ideally a loan that has better terms. Refinancing a car to better terms often results in saving money, either in the long run by reducing the payment period or interest rate, or in the short term by reducing monthly payments. In fact, in 2021, Auto Approve customers saved, on average, over $100 a month. Interest rates are still relatively low in 2022, so now is an excellent time to consider refinancing. Here are some ways that refinancing your car loan can help you.
You may be able to secure a lower interest rate when you refinance your car loan, either because the current market rates are low or because your own personal financial situation has improved. By lowering your interest rate, you are lowering your monthly payments and will end up saving money over the course of the loan.
When you refinance your car loan, you may be able to change the terms of your payment period and shorten the period. This can save you money overall, as the sooner you pay back the loan, the less interest you will pay in the long run.
If your monthly budget is a bit tight these days, refinancing your car loan is a great way to free up some monthly cash. This will allow you to pay off the loan over a longer amount of time, reducing your monthly payments significantly. And while you will end up paying a bit more over the length of the loan because you will be paying interest for a longer period of time, it can give you much needed breathing room if you are currently struggling.
If you have a bit of extra time on your hands, consider getting a side job. There have never been more opportunities for people to get a few more sources of income, and some of them can be done from the comfort of your home.
Delivery groceries with Instacart or Shipt
Become a rideshare driver
Become a virtual assistant
Work as a transcriptionist
Work in someone’s home as a babysitter, house cleaner or tutor
Become a pet sitter
Take a passion or hobby and try blogging or setting up an Etsy store
While none of these will get you rich quick, they all provide some additional and flexible sources of income. And an extra few hundred bucks a month can make a big difference in your budgeting and savings plans.
Look carefully through all of your employee paperwork to find out what employee benefits you are offered. So many people do not take advantage of these benefits, and it can mean money down the drain.
Does your employer match your retirement fund contributions? Many companies offer either partial matching or dollar for dollar matching.
Partial matching: They will match part of the money that you put in. This varies from employer to employer, but it is common for employers to match 50% of your contributions. This is usually capped at 6% of your salary (they will contribute up to 3% of your salary).
Dollar for dollar matching: They will match your contributions in full up to a certain amount. If you are dollar for dollar up to 3%, your employer will match only up to 3% of your salary.
Make sure that you are maxing out your contributions every year. If you do not contribute the maximum amount to be matched, you are walking away from free money.
Employers often offer Health Savings Accounts, and there are three main types that may be available:
HSAs: These accounts are owned by the employee, and contributions can come from both the employer and the employee. Money is placed tax-free in an account and can be used for qualified medical expenses. These are usually only available if you have a high deductible plan. Many companies will contribute money per year to offset having higher deductibles.
FSAs: These accounts are owned by the employer and deductions are taken from paychecks as tax-free contributions. Employees can be reimbursed out of this account for qualified medical expenses.
HRAs: These accounts are set up by the employer to offset medical expenses. Employers are the only contributors to these types of accounts, so you cannot add your own contributions. This money can be rolled over from year to year, so if you don’t use the total amount one year you can use it the following year.
If any of these options are available to you, do your research and decide what’s best for you. But with the rising cost of healthcare, health spending accounts are more important now than ever
Additional employee benefits may be available to you and can vary widely. Some of these benefits may include:
Life insurance
Disability insurance
Dependent care options
Legal plans
Free gym membership
Tuition reimbursement or support
Free parking
Professional development program
Talk to your human resources department if you have questions about your eligibility, but be sure that you are taking advantage of any and all employee benefits that are offered. After all, they are part of your salary.
We hope this has helped motivate you to make 2022 your best financial year yet. From maximizing your benefits to refinancing your car loan, there are a lot of ways to get more bang for buck.
Get started with Auto Approve today to see how much we can save you when you refinance your car loan!