Money expert: Here are Top 5 steps to achieve financial health in 2022
Want to get on a better financial footing in 2022? Follow these five steps, says one expert.
Jean Chatzky, the personal finance expert, recently spoke with Yahoo Finance Live (video above) about how you can improve your finances this year.
Step 1: Embrace your current financial situation
In order to do that, you need to ask three main questions about your finances.
“What’s coming in? What’s going out? And where is it going?” Chatzky said. Knowing your financial situation will help you move forward.
Step 2: Don't compare your financial goal with others
When trying to save more money, you should set your own financial goals and ignore peer pressure from friends or social media to overspend.
Chatzky said, "if you can shut out the rest of the world, whether it's shutting out your colleagues and friends, or shutting out social media because it tells you to buy certain things or wear certain things, you'll be much more successful in achieving your ultimate goals."
During the New Year's Eve celebrations at Times Square on December 31, 2021, REUTERS/Stefan Jeremiah, a person wearing 2022 glasses looks on as the Omicron variant continues to spread in the Manhattan borough of New York City, U.S.
Step 3: Set small, manageable goals to save
Financial resolutions can be broken up into smaller, more manageable bites to help you reach those more ambitious goals.
When it comes to saving, Chatzky said, "It's easy to say, 'I want to save $5,000 a year."But it's much more convenient to say, 'I want to save $100 a week.'"
Step 4: Automate savings
You will have more money left over to spend on yourself after paying yourself first.
Human beings are impulse creatures. Chatzky said, "We want what we see, we buy what we want.". "If you are putting money into a health savings account, or an IRA, or a 529, or just a plain saving account, have your contributions deposited automatically every time you get a paycheck.".
Step 5: Ask for the money you want in your career
4.5 million Americans quit their jobs in November, and Chatzky said that shows workers are getting better paychecks
Many are not leaving the workforce for good. Rather, they are looking for better-paying jobs," Chatzky said. "Switching jobs is probably the best way to get a substantial raise."
Instead, request a raise When asking for a raise, take "the pulse of the current work environment," Chatzky said, by learning how much a new hire might make in your current position and comparing your compensation to what your coworkers earn, then present evidence of your worth.
Chatzky said it was not about you wanting a raise or needing a raise, but about what you have accomplished for the company that you can show your boss.
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Ella is the personal finance reporter for Yahoo Finance. Follow her on Twitter @bookgirlchicago.
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