3 min read
I always get asked “AO, what money moves should I be making right now?” And it’s a great question! After two years of living in a pandemic, many of us have a new passion for our finances. So today I’m sharing the eight money moves you need to make in 2022 to build wealth and win in the New Year. These are things you can start doing right now to set yourself up for success. Let’s get into it!
1. Get a Clear Vision for Your Money.
The first thing I want you to do for your finances in 2022 is decide what your financial goals are. I need you to get clear on your vision, because that’s going to determine every decision you make for the rest of the year.
Ask yourself this: What do I want my finances to look like by December 31, 2022?
Do you want to save $10,000? Do you want to max out your retirement account? Do you want to pay off your student loans? All of these are great goals, but you have to decide what you want to do and get clear on that vision before you start taking action. The Bible says that without vision the people perish (Proverbs 29:18), so make sure you get clear.
Then, start planning how you’ll achieve it. I recommend setting smaller goals throughout the year to help you reach your overall goal. So, if you want to save $10,000, set a monthly goal of saving $833 in a separate account. It’ll help you to stay focused and make your goal seem much more manageable.
2. Start Making a Monthly Budget.
Once you know what financial goals you want to achieve in 2022, you need to start making a zero-based budget. A monthly zero-based budget is your roadmap to achieving your financial goals. Before each month, write down how much money you think you’ll make, then write out all of your expenses — food, transportation, payments, etc. If you have money leftover, add it to your debt payment or your savings. That’s what makes it zero-based; every dollar is accounted for in your budget.
Once you make your budget, you have to track your expenses throughout the month for it to be effective. That’s the only way you know you’re not overspending and are on track to hit your goals.
Thankfully, there are lots of budgeting apps out there. Find one that connects to your bank, so it’s easier to track expenses. You can even use a spreadsheet. No matter what you use, just make sure you’re keeping up with your budget every month.
3. Get on a Plan to Pay Off Your Debt.
Y'all, let’s make 2022 the year of getting out of debt. Debt freedom is one of the pillars of building wealth and leaving a legacy for your kids. When you don’t have payments, you can enjoy more of your hard-earned money.
The first step to getting out of debt is knowing exactly how much debt you have. Pull up your credit report and write down every debt you owe, who the creditor is and what the current balance is. Car payments, student loans and credit cards are all debt. The only debt you don’t need to write down is your mortgage.
Once you’ve written out all your debts, I want you to attack it! Start finding extra money in your budget and cutting your expenses to pay off your debts faster.
Some ways to cut expenses are to close subscriptions you aren’t using, stop eating out and make meals at home. Get creative on your dates. Instead of taking your special lady or guy out to eat every weekend, go on a walk in the park or cook a romantic dinner at home.
Also consider getting a second job to pay it off faster. It’s a short-term sacrifice now, but you’ll be glad you did it.
4. Out of Debt? Build Your Emergency Fund.
A record 20 percent of Americans say their biggest financial regret during the COVID-19 pandemic is not saving enough money for emergencies. I don’t want you to have any regrets this year. So, once you’re out of debt, I want you to save an emergency fund of 3-6 months of expenses in a separate bank account.
If you’ve just finished your debt-payoff journey, I know it can be tempting to slow down, but don’t. Take this seriously and protect yourself against going back into debt.
Once you’re done saving your emergency fund, don’t touch it unless it’s a genuine emergency! The latest NFT drop isn’t an emergency. This money is for when your car breaks down unexpectedly, your apartment floods or you get sick and can’t work for a while. Trust me, your future self will thank you for this.
5. Invest in Your Retirement Account: 401k, Roth Ira, Etc.
Growing up, my dad would tell me: “Proper prior planning prevents poor performance.” He meant that if I want to reach my goals, I have to plan and prepare for it. That’s just like saving for retirement. If you want to retire comfortably, you have to start saving and planning now.
Whether you have a 9-to-5 job or are self-employed, you need to invest 15 percent of your income towards retirement. I recommend investing in mutual funds to protect your investment long-term. Mutual funds are diverse, stable and gain compound interest when invested in a retirement account, like a 401K or Roth IRA.
To show you the power of compound interest, check out this example: Let’s say you turn 30 years old this year and you want to retire at 67 years old. If you contribute $200 per month this year for 37 years, you’d have contributed $88,800, but your retirement will be worth almost $1.5 million! If that doesn’t make you want to start investing in 2022, then I don’t know what will.
6. Invest Extra Cash in the Stock Market, Mutual Funds and Cryptocurrency.
In 2020, more Black people started investing than ever. I love that, because it means we are learning and implementing new methods of wealth building. If you’ve been doing what I recommend — saving for retirement, paying off your debt and saving your emergency fund — and you still have money at the end of the month, investing it is a great idea.
The stock market, cryptocurrency and NFTs are all new and exciting ways to invest in 2022. While I don’t personally recommend each of these investments, I think it’s better than blowing your extra cash on shoes and clothes that you won’t wear months from now.
Still, don’t use these methods as your primary retirement investing strategy. Instead, use good mutual funds in a retirement account for that.
7. Get With a Tax Pro to File Your Taxes Legally and Professionally.
If you’re serious about making money moves in 2022, then you need to get a certified public accountant to look at your taxes.
If you fit into any of these categories, you need a CPA:
- Self-employed or own a business
- IRS audits you
- Filed bankruptcy recently
- Own a rental property
- Funding a 529 savings plan or ESA for your kids
- Self-directing your retirement accounts
A CPA can help you file your taxes correctly and maximize your deductions so you pay as little in taxes as possible. To find a quality CPA, look for someone with plenty of experience in your tax situation, whether that’s small businesses, real estate, bankruptcy, etc. Ask if they’re knowledgeable about tax code updates from the current year and any potential write-offs and deductions you might qualify for.
8. Invest in Your Education Through Books and Podcasts.
Your mind is your business, and in 2022, I want you to grow your business by increasing your knowledge. Some of the wealthiest people in the world, like Bill Gates and Warren Buffett, spend most of their day reading. That’s why I want you to invest in your education through reading books and listening to podcasts that will help you to improve yourself.
In 2022, I challenge you to read one book per month. It can be about anything from money to personal development to relationships and faith. It’s just important that you’re reading. If you’re not a reader, then listen to audiobooks or join a book club. First, it’ll grow your mindset, then it’ll grow your wealth.
You guys, 2022 is about to be our best financial year yet! Start making these money moves today and watch your finances completely transform.