Do You Want to Improve Your Financial Health in 2022?
Ring in the New Year with a Financial Bang
What does a Black Woman in charge of her financial health look like? What would it look like to you? It likely would include maximizing your earning potential by managing your spending, ensuring you’re saving, understanding financial institutions, prioritizing your investments, and protecting your assets.
Yes, ladies, there’s still time to improve your financial future before 2022. The first step is to accept responsibility for your financial growth. The second step is to practice mindfulness, which will keep you focused, determined, and ultimately, unstoppable.
Financial Planning Tips for the Rest of 2021 and Beyond
Clean Out Your Closets and Storage
Get rid of unwanted possessions. Sell things of value online or at consignment stores. Donate items that are more difficult to sell to charities like Goodwill. If you donate, the charity can itemize the value of your donations for a tax deduction that can be used as a write-off on your 2021 taxes.
Spend Your Money Wisely
Consider investing your money to help grow your wealth. For instance, a share of Apple Stock is around $500 — about the same cost as an Apple iPad Air. In ten years, the stock could be valued at nearly $7,000. Another example is Tesla. If you purchase 36 shares of Tesla stock, the cost is approximately $80,000 which is about the same cost as a Tesla Model X. In ten years, the Tesla stock valued approximately $6.9M. What about cryptocurrency? Instead of buying that $5,000 designer bag, consider how good you could look with the return from Bitcoin. Get started investing with a book like Investing All in One for Dummies.
Get Rid of Bad Debt
If you have debt with an interest rate above 7%, pay it down as soon as possible. Loan consolidation may be an option. Ask your banker or financial advisor to explain all of your available options. When feasible, make extra payments to pay off small debt first. Remember to put the money you were paying toward other bad debt accounts until each account is paid. Once your debts are completely eliminated, use the funds to begin investing or saving. Always max out your retirement saving account when your employer offers an employee match.
Stop Living Paycheck to Paycheck
Begin building a buffer of at least $500-800 after each paycheck. Create an emergency fund of at least 3-6 months of your monthly income. If you can’t afford to save, now is the time to find a way to increase your income and/or reduce your debt.
Plan For Your Retirement
Set aside 4-10% of your income for retirement — regardless of your financial situation.
Create a Saving Plan for Purchases
Rather than purchasing that $1,000 purse or pair of shoes you want for Christmas, create and follow a realistic budget that includes your current and future needs.
Use Credit as an Asset
Increase your credit score by doing the following. If your credit limit is $1,000, never charge more than $300. Pay off your credit card, and all bills, in full each month. Consider splitting the paid amount into two monthly payments. For example, if the $300 full payment is due on the 18th of the month make a $150 payment on the 1st of the month and another on the 15th.
Create Other Streams of Income
Start a business or side hustle. Find something you love and would likely be doing anyway to make extra money. It could be anything from cooking to babysitting or writing. Register your business with the state and federal government. Startup business costs and expenses can be written off on your taxes. Even if you have a job, your startup costs may help set off your payroll taxes from 2021 employment.
Life insurance and fraud policies are tax advantages AND investments. Work with insurance professionals to identify the right plans for your situation.
Respect the Power of Money
Save early and pay yourself first are fiscally responsible efforts. When you understand the financial institutions and services available to you, unimaginable dividends are possible because your money grows over time.
When you control your spending and grasp the difference between needs and wants, long-term investing and retirement planning becomes even more powerful. Acquiring debt to fund your education, buy a home, start a business, or make real estate investments are all viable tools to build wealth and increase assets.
As we prepare to start a new year, protect your assets and your loved ones from financial worries, fraud, identity theft, and more by making your financial health a priority.
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