While the pandemic made the hours, days and months feel like they were dragging on at times, it also felt like 2020 and 2021 flew by, with many to-dos and planned improvements still on your list waiting for you to tackle.
As we approach yet another new year and think about some resolutions, 2022 is the year to prioritize your finances. And what better way to do that than by adjusting your current budget or creating your first budget for any budgeting beginners (welcome!) reading this.
First, let’s take a look back at the ways 2020 and 2021 impacted personal budgets.
The pandemic’s impact on personal finances
More than half of non-retired Americans say the pandemic has made it harder to reach their long-term financial goals, according to Pew Research Center survey. For some, that has meant lower wages due to lost work from the pandemic, taking on more debt to cover rising expenses and worrying about how they will save for retirement.
While 28% of Americans started setting aside more in savings, 39% either started contributing less to savings or not at all, spurred on by lost wages and increased everyday expenses. On the other hand, 54% canceled or postponed a large expense with 49% putting it in savings or using it for another essential expense.
Best financial tips for 2022—6 budget adjustments to make today
Next, let’s take a look at some 2022 budgeting tips to help you bounce back from the impacts of the COVID-19 pandemic and make 2022 your best year yet.
- Take a continuous approach to identify your expenses. Similar to how many companies and organizations have a continuous improvement approach to finding ways to be more efficient and productive, look at your finances through the same lens. Schedule time to review your budget each month (or more often) to see what areas are appropriately accounted for and what areas need to be adjusted. If budgeting and finances aren’t your thing, consider making it a special night each month by celebrating the completion of your budget review with your favorite meal or a movie night in.
- Find a budgeting tool that works for you but do write it down. Just like no two snowflakes are alike, no two humans are the same (even twins!). There are hundreds of budgeting tools out there, from the old school pen and paper method to budgeting apps galore. We recommend starting with pen and paper (or a simple Excel file) to get all of your income and expenses in front of you. Then, either keep it on paper or in Excel, or transfer it into a budgeting app. As a reminder, Verve members have access to free budgeting tools within online banking.
- Find your why (yes, this applies to finances). ‘Find Your Why’ is more than a popular book, TED talk and online course by a British-American author and inspirational speaker about finding clarity, meaning and fulfillment in your work. It also applies to every aspect of your life, especially your finances. You can set up the best budget, but if you haven’t identified why your budget matters to you, it can be hard to stay motivated and stick with it when temptations or trying times arise. Take time to think about and write down why you are budgeting, which could be anything from being able to retire early to breaking the cycle of poverty in your family or something else entirely. Whatever it is that is motivating you, write it down, draw a picture, etc. and put it in a prominent place so you see it frequently and stay motivated.
- Face reality. It can be easy to set a budget for what you think you spend or think you should spend, but that can leave you overspent on your budget and out of cash to pay for other expenses. For example, if you set aside $110 a week for groceries but frequently spend $180, you will have spent an extra $280 a month that you likely had allotted for something else. As you are budgeting, take a look at the last three months of expenses and use those numbers in your budgeting worksheet or app.
- Make a game out of it. We understand that finances and money are not exciting to most, so make a game out of it! Set budget goals (such as setting aside a certain amount in savings per month, which you can get alerts for in online banking) and reward yourself when you hit them. Consider trying one of these budgeting games to help make staying on budget fun.
- Find a budgeting buddy. Whether it’s your partner, a friend or family member, find someone who wants to stick to their budget and become budgeting buddies! This doesn’t mean sharing all your line item amounts or what you spent on certain things, but it does mean talking about your budget and any struggles you might be having, as well as creative ways to save money in 2022 that work for you. Be open and honest and help hold each other accountable and provide encouragement—having someone to lean on really does help when things get tough.