6 Money Moves to Start the New Year Right!

This time of year, everyone is talking about what you need to do to finish out 2021 strong. That is important, but it is also key to start your new year right out the gate! By taking some time to plan for your finances in the new year, you can make a plan, set the plan, and then forget it! Well, at least until next year! Here are the 6 money moves to start the new year right, plus there is one bonus move for some of you! 

I am listing some common financial housekeeping items to look at but make sure you take care of anything that you have personally going on. This list is not comprehensive to every person out there! 

Some of these items piggyback off of my monthly money meeting, and doing them will set up your money meetings to be quick and easy throughout the year! This is a double win! 

6 money moves to start the new year right

• Check the newly updated limits to workplace retirement plan contributions and make adjustments.

Most workplace retirement account contributions limits increased from $19,500 to $20,500 for 2022. This applies to 401(k), 403(b), and 457 type plans. You can read the details in the IRS release here. 

If you are not yet hitting the max on that account, it’s ok! $20,000 is a lot to defer in a year! A couple tips that can help you on this journey:

• Make sure you are contributing at least up to the match. The employer match is free money they are putting into your account for you, so a 3% match is essentially a 3% raise deposited into your retirement account, rather than paid to you. Yay for free money!
• Each time you get a raise, increase your retirement contribution by a few % depending on the raise. Make sure part of the raise goes to increase your paycheck so you feel like you still got a raise. It’s all about tricking the mind! But, by sending half of your raise to your retirement account, you can trick yourself into increasing your annual contribution without even knowing it!
• If you know a large bonus is coming, increase your retirement % for that paycheck so 25% or 50% of the bonus goes into your retirement account. You can still have fun with the rest, knowing you are saving a significant part of your bonus!

• Verify your IRA contribution plan for 2022

Make sure you are going to max out your IRA (either Traditional or Roth) for 2022! This is one of the best savings vehicles you can use for retirement, so make it count!

The contribution limit didn’t change for 2022, it is still $6,000 per year with a $1,000 catch-up for those 50 and over. If you contribute monthly, verify your automatic transfers will happen in 2022 and that you will max it out! If you didn’t max it out in 2021, then plan to bump your contributions a little bit so you are closer to hitting that max. 

If you use extra money to fund your IRA instead of sending a regular contribution, then make a plan for any bonus money, tax refund, or gift money to get that account funded for the 2022 tax year. 

• Evaluate your savings account goals and update your automatic transfers

Check-in on where you are at with your savings plans and make any changes. If you have your emergency fund with 3-6 months of expenses, then you probably don’t need to add any more to that account and can redirect those savings to something fun like a vacation savings account! 

If you don’t have automatic savings transfers set up, check out my post on High Yield Savings Accounts and get one set up with multiple accounts! I love naming my account to match what I am saving for! It is way more motivating to transfer an extra $250 to my new car fund or vacation fund than to Account #63229408! Finances are all about mind games!

See if there are any new goals you want to save for in 2022. If so, start an account and make a plan to meet that goal!

• Set your budget or spending guidelines so you are ready for your monthly money meeting

Not everyone needs a full budget, but it can be helpful if you are squeezing your dollars to pay off debt or save for retirement. 

If you want to know where every dollar is going, check out a budgeting software like You Need a Budget or Personal Capital.  

If you are comfortable with most of your spending levels, then take a moment and identify if there are any types of spending that you want to keep an eye on. This is usually a splurge type of spending like eating out, coffee purchases, clothing purchases, or home supply purchases. These types of expenses can quickly add up if you are not paying attention and may not be worth the cost to you. 

Set up your monthly money meetings with yourself on the calendar for the year so you don’t miss one!  

• Start looking for tax documents and gathering any donation receipts

Sorry to ruin the mood, but yes tax time is coming up. It is easier to gather information as it comes in, rather than scrambling in March (or October!!) to find documents from months ago. Grab a big manilla envelope, put it where your bills and mail come in, and label it 2021 Tax documents. That way any tax items that get mailed to you or you print out online can just go right into the envelope. 

Make sure you watch for year-end donation acknowledgments that are being mailed this time of the year. They often can be easily discarded, but are very helpful in reminding you of donations made earlier in the year.

• Review any debts and ensure that debt repayment plans are on track

If you have any debt you are working on paying off, review the payments and ensure that payment plans are on track. Especially if you are working on a debt snowball or debt avalanche payment method, it is good to make sure nothing changed and you are throwing your excess funds at the “best” account to pay down first. 

Many people have been using the Student loan payment break to get ahead on other debts or save money in savings accounts instead. Those are set to resume payments in May and they will also again start earning interest. If you have been saving your payments, make a plan to make a large lump sum payment in April before the interest calculation starts!

Bonus-HSA account! 

Unfortunately, not everyone has access to an HSA account.  If you have access to an HSA account, make sure you are maxing it out for 2022. The limit increased by $50 to $3,650 for an individual plan and $100 to $7,300 for a family plan. There is also a $1,000 catch-up contribution you can begin the year the covered person turns 55. 

There are a ton of benefits to having an HSA account, I talk about how they work and how you can use them as a sneaky retirement account in this post.  

Check to make sure you are maxing the account for 2022. It is best to contribute through a paycheck deduction because you are then saving on Social Security and Medicare taxes on top of the other tax savings. If that is not possible, then it is still a fabulous tax benefit to contribute personally.

The best part of the HSA is it doesn’t need to be spent down to zero each year, so you can accumulate a balance in the account. If you have several thousand dollars in your account, look into investing some of it. Many HSA accounts offer investment options if your account is large enough. 

Remember, this HSA still needs to be able to pay any medical expenses that you may have, so you don’t want to put your entire balance into investments because odds are you would get hit by a bus the same day the stock market tanks! I invest mine but keep one year’s deductible in cash so I know I can pay my deductible for a year if something catastrophic happens. 

There you have it! 6 money moves to start the new year right! This list isn’t personalized for every person, so make sure you take care of any other money items that you may have even if I didn’t list them here. 

By making plans to start the new year right, you can set up your financial goals for the year and make plans to ensure you hit all of them. How good will that feel in December of 2022? 

If you are making financial plans to start the new year right, what is on your list to check? Share your thoughts in the comments below or over on our Instagram page!  

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