Budgeting For The New Year: How To Sit Down And Create A Budget In 2022.

Recent years have produced a number of financial problems. From the soft recession of 2019 and 2020, inflation in 2021, to the coronavirus’ effect on the economy overall, personal financial planning has become very difficult. This article will outline the ways that you can budget your money for the upcoming year so that you can make the most of 2022. 

Making a budget can be time consuming, but it is worth doing so that you can have some financial security and peace of mind. With the new normal of the pandemic, it still remains possible to set up a financial plan that works for you. It is simply a matter of reassessing your goals and priorities. If you have kept your job through the pandemic it will naturally be easier for you to do so, but even if that was not the case you can still set up a feasible plan and avoid the pitfalls of overwhelming debt and a possible bankruptcy filing.

What is your new normal?

Have you cut back on frivolous spending? Have your grocery habits been altered? Has your travel budget changed? Have you been reading freedom relief reviews ?In these irregular times it stands to reason that something major has changed with your spending habits. When you sit down to plan your 2022 budget ask yourself what is important to you. What areas of your financial life matter the most, and think about where you want your money to go. If these changes have meant that you have extra money set aside you may want to consider moving money towards retirement plans. If your spending habits align with your financial realities it may be possible to make these moves. 

If your new normal means a loss of a job and income you can still create short and long term goals for your money. One way is to set aside 50% of your income for living expenses and utilities, 20% for your savings, and the other 30% to do what you want with it, or pay down debts. These are good figures to work with for both groups: those who kept their jobs and those who suffered financial and job losses.

Start small

What short term goals can you put together? What can you reasonably expect to focus on? What is one area of your finances that you think you can change? If you can get into this way of thinking you will eventually be able to extend it to different areas. 

Do you have current financial practices that are counterproductive? In other words, are you spending money on things that you don’t need to? If you haven’t broken some of your pre-pandemic habits now would be the time.

Rebuilding your savings

The pandemic did a lot of damage to many people’s savings accounts, and many people had to dip into their savings in order to get by. Now that we have largely adjusted to this reality we can begin to rebuild what was lost. If your earnings have become more reliable, take the time to start putting money back into your future financial safety net. Get a sense of what you can afford to set aside month by month, and once your savings begins to recuperate you can start thinking in the big picture — like paying down debts and making investments. Depending on your age and financial standing, it might be worth using 2022 exclusively as your rebuilding year. Doing this now can protect you from future setbacks and other national calamities.

Who should you consult?

Reach out to your financial planners for advice. Not only is it their job, they will also have knowledge based on the broader struggles they have witnessed in the market and with other clients. 

See if you can break your 12-month budget into a series of 90-day budgets

This could be difficult to work out if you already have a 12-month plan in mind, but it does allow you to micromanage in a way that might be more workable for you. You will have greater flexibility in the event of unforeseen circumstances, and will be able to react more quickly. And following a 12-month plan blindly, no matter the ebbs and flows, could be too risky.

Steven Harris is a family law & divorce attorney in Birmingham, Alabama. He lives with his lovely wife of fifteen years and regularly writes informative articles online about domestic relations law and other related topics. You can follow him on Twitter @theharrisfirm.

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