The new year glistens with hope, promise, and excitement. It opens the door for new beginnings and a chance to grow. It’s also an excellent time to take a look at your financial plan.

What are you excited to accomplish this year? How can you maximize the resources that put you on a path to live your ideal life?

Here are five financial goals to help get you started.

Goal 1: Commit To (Extra) Retirement Savings In 2022

If you’re struggling to find a financial direction for the new year, you may want to start with the goal that’s lying in plain sight—retirement. After all, saving money for your future self is a top priority for most investors.

Top Retirement Savings Vehicles for 2022

 

• Traditional & Roth 401ks: These company-sponsored retirement plans allow employees to contribute to pre-tax (traditional) or post-tax (Roth) accounts that grow tax-free until retirement. Many employers will also match your contributions up to a certain amount (i.e., 4% of salary). If you’re not already, make 2022 the year you contribute enough to qualify for the entire company match—it’s free money available to you!
  • 2022 Contribution Limit = $20,500 ($27,000 for investors age 50 and older)

 

• Traditional & Roth IRAs: For investors without access to company-sponsored plans or who just want to add a bit more to their nest egg, IRAs are an excellent option. They function similarly to 401k plans but typically offer more investment flexibility. If you have access to a company 401k, you still may be eligible for Roth IRA contributions (assuming you meet the income requirements).
  • 2022 Contribution Limit = $6,000 ($7,000 for investors over the age of 50)

 

• HSAs: Health Savings Accounts allow investors utilizing High Deductible Health Plans to save pre-tax funds to pay for qualifying medical expenses. Any unused funds can accumulate year over year and can even be invested in the stock market for long-term growth. Most people will need to pay for medical expenses at some point in their lives (even if it’s in retirement). With that in mind, these tax-efficient investments will never go to waste.
  • 2022 Contribution Limit = $3,650 for individuals or $7,300 for families

 

• Brokerage Accounts: While they do not offer much tax savings, taxable brokerage accounts provide immense flexibility. You can contribute as much as you want to these accounts and can access the funds at any time—just be mindful of the tax liabilities.
  • 2022 Contribution Limit = Unlimited

If you have the necessary cash flow to maximize some or all of these accounts, you could be well on your way to a prosperous retirement.

Ready for more numbers you should be aware of in 2022? Download our free “Important Numbers” chart below to stay on the right track this year. 

Important Numbers for 2022

Goal 2: Create a Plan for Education

Paying for education is an essential goal for many families. Considering you have a shorter time horizon (roughly 18 years), creating a plan as early as possible and sticking with it is critical. 

Ready to feel prepared for college planning? Download our free college money report to answer your top questions about prepping for college. 

Top College Savings Tips for 2022

• Set a Target & Start Early: It’s difficult to start saving for college if you are unsure how much you will need. It may be an inexact science, but set a goal and tailor your investment strategy to meet it. The earlier you start, the less dependent on market returns you will be. You can also use a college planning calculator to help get a ballpark figure. 

 

• Use 529 Plans: These accounts allow investors to contribute for the benefit of their child that will grow tax free and avoid taxes upon withdrawal (assuming the funds are used for qualified education expenses).

 

• Use Roth IRAs: Most people don’t realize you can access your contributions to Roth IRAs (not earnings) at any point before 59.5 without any taxes or penalties. This can be a great option for families who are unsure how much they are willing to pay for their child’s education. Instead of tying all of your savings in a 529 plan, a Roth IRA will give you some flexibility.

 

• Use Brokerage Accounts: Speaking of flexibility, brokerage accounts are an excellent savings vehicle for just about any quantifiable goal (including college). Finding a balance between 529 plans, Roth IRAs, and brokerage accounts is often advisable for college savings.

 

• Apply Properly: There is a lot more to a college savings strategy than the investments themselves. At Chladek Wealth Management, we help our clients consider ALL aspects of college attendance. Where should your child go to school? Are they eligible for scholarships or grants? How do you fill out the FAFSA Application? It’s vital to have a plan for investing AND spending college savings.

Goal 3: Evaluate Your Family Budget

January is a fantastic budgeting month! A new year can serve as a fresh start to creating a customized spending plan.

Top Budgeting Tips for 2022

• Focus On Big Ticket Items: Rule number 1 in budgeting is focusing on the spending habits that have the most significant impact on your financial success. Everyone can identify the problem areas (such as dining out or clothing). It’s too hard to budget for every single expense you’ll have for the year. Start with the big stuff and go from there.

 

• Engage All Parties: Ask yourself, who has an impact on your household spending? Is it your spouse? Children? An extended family member? You will need support from these people to get (and stay) on track for the long term.

 

• Use Technology: Services such as YNAB make it easier than ever to track spending. No need to build out tedious excel spreadsheets in a 2022 world.

 

• Be Flexible: Budgeting, by definition, is an imperfect system. Go into it knowing you won’t be perfect. We’re not robots, and unexpected expenses are 100% going to happen.

Goal 4: Replenish Your Cash Reserve

Did you have to dip into your emergency fund in 2021? No worries, that’s what the money was there for. Just make sure you create a plan to replenish it. 

Emergency savings give you the “permission” to take on investment risk elsewhere. If you can’t cover short-term/unexpected expenses, you can’t truly invest for the long term. If you are unsure how much you should have in emergency savings, start with 3 to 6 months of fixed expenses and necessities (i.e., mortgage, utility bills, taxes, insurance, groceries, etc.).

Goal 5: Set Goals That Inspire You

Consider both your short-term and long-term goals. What’s important for you to accomplish this year? What has been constantly top of mind for you over the last 12 months? The more specific you become with your goals, the easier it will be to craft a personalized financial strategy.

The five most universal goals we help our clients achieve are:

• Retirement
• Financial independence
• College savings
• Buying a home
• Career growth

Bonus: Start Preparing For Your 2021 Tax Return

If you haven’t already, schedule some time with your CPA. Accountants get extremely busy as the tax-filing deadline (April 18th in 2022) approaches. The sooner you get on their calendar, the better.

 As they become available, start gathering your tax documents. Here are a few examples of common tax preparation documents:

• W-2 & Other Income Sources
• 1099s
• K1s
• Proof of Expenses & Receipts
• Real Estate Info

Make 2022 Your Financial Year

Are you ready to craft your financial plan for 2022 and beyond? Schedule an appointment with our team today and hit the ground running in the new year!

Worried that you missed a financial item on your to-do list? Take another look at financial moves you can consider this year with our free download below. 

What Issues Should I Consider At The Start Of The Year 

Disclaimer:

 The contents of this article are for general information and educational purposes and should not be construed as specific investment, financial planning, tax, accounting, or legal advice. Please consult with a professional advisor before taking any action based on the contents of this article. All investment and financial planning strategies involve risk of loss that you should be prepared to bear. We cannot guarantee any investment performance whatsoever, and past performance is not indicative of potential future returns.