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7 Actions to Take for a Financially Smart 2022

Andrew Prignitz, CFP®, CRPC®

Director of Financial Education

Last Updated
January 06, 2022

Tips to Help Improve Your Financial Outlook in the New Year

Welcome to 2022! With a new year comes new hope for the future and an opportunity to make positive changes in our lives. If you’re hoping to improve your financial outlook this year, the following actions can help.

  1. Plan for inflation – According to U.S. Labor Department data published on December 10, 2021, the United States’ 12-month inflation rate is 6.8%, the highest it’s been since June 1982.1 Rising inflation can have a big impact on your spending power. The following tips can help you combat inflation in 2022:
    • Delay large purchases – Some price hikes may be temporary. For example, the chip shortage that helped drive up car prices in 2021 will likely lessen in the next few months, making auto purchases more affordable. Similarly, home remodeling projects may become more affordable as demand for raw materials and supply-chain issues ease.
    • Maintain a diversified investment portfolio – A diversified mix of investments can help offset inflation. If your asset allocation drifted off course due to higher performance in some sectors than others, it might be time to rebalance. Your wealth manager can help ensure your target allocation is in line with your goals and positioned to help offset inflation.
    • Negotiate expenses – It never hurts to ask for a discount on everyday expenses, as many ongoing costs are negotiable. Consider checking in on your streaming services, cable bills, cell phone plan, insurance premiums and gym membership to see if lower rates are available.
  2. Revisit your emergency fund – Given the uncertainty of the last couple of years due to the COVID-19 pandemic and potential changes to the tax code, it’s more important than ever to save in an emergency fund. If you depleted your savings in 2021, consider building up six months’ worth of expenses in an emergency savings account.
  3. Review your insurance coverage – Revisit any life, umbrella and health insurance policies to ensure they continue to meet your needs given any life changes that occurred in 2021.
  4. Prepare for potential tax code changes – President Biden’s Build Back Better Act includes significant changes to personal and business taxes. While certain provisions may change before the bill is ratified, you might want to check in with your wealth manager to see if there’s anything you should do now to prepare.
  5. Increase retirement plan contributions – Making small annual increases to your retirement plan contributions can have a big impact on your retirement savings over time. Consider upping your contribution by 1% to 2% this year.
  6. Access your credit report – Each of the major credit bureaus – Equifax, Experian and TransUnion – allow consumers to access one free report each year. Take advantage of this opportunity to double check your credit score and identify any unexpected errors.
  7. Reevaluate your financial goals – It’s important to update your financial goals on a regular basis to make sure they remain in line with your ever-evolving life. Your wealth manager can help you identify any changes that should be made to your financial plan to help ensure it continues to meet your needs.

At Creative Planning, we’re committed to your financial success. Our teams work to ensure your financial plan continues to meet your long-term goals, taking into consideration a wide range of factors, including market forces, potential legislative changes, your goals for the future and any additional challenges you may face. If you’d like help taking action toward achieving financial success in 2022, or for any other financial matter, please contact us.

Footnotes

  1. https://www.usinflationcalculator.com/inflation/current-inflation-rates/
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This commentary is provided for general information purposes only and should not be construed as investment, tax or legal advice, and does not constitute an attorney/client relationship. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.

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