What Are the Most Important Financial Actions to Take in 2022?

Preston Rosamond |

By Preston Rosamond

It’s a new year, which often comes with renewed motivation and fresh resolve! If you have many goals and resolutions you want to make a reality this year, it can be overwhelming to know where to start or which ones should take priority. Thankfully, when it comes to your financial goals, we’re here to help! Here are 4 of the most important financial actions to take in 2022.

1. Take Stock of Your Financial Goals

The first way to jump-start your financial plan is to set financial goals. Do you have a goal for your finances or are you just crossing your fingers and hoping you have enough for the lifestyle you want? 

Specific goals with defined timelines will help to determine the best course of action, including how much risk you can and should take with your money. For instance, if you’re looking for a guaranteed source of income, then you will probably want to stick with investments that will provide long-term security. Conversely, if you are looking for substantial growth, then you might want to take on more risk and invest less conservatively. Every dollar in your portfolio should be working toward a specific goal.

Remember that the best goals will be SMART: 

  • Specific: The more you can identify exactly what you’re saving for, the easier it will be to work toward it. 
  • Measurable: As much as possible, try to identify how much your financial goal will cost. Do the research to figure out what you need to save so that you’re able to see tangible progress along the way. 
  • Attainable: Make sure your goal is realistic and achievable. This might require some self-reflection or reevaluation of your priorities.
  • Relevant: Ask yourself which goals align with your core values. Remember that your finite assets will be split amongst your seemingly infinite list of wants. The more you can scale back your list to what is truly relevant, the quicker you’ll be able to achieve each goal.
  • Timely: Identify the timeline for each goal so that you can prioritize which ones need to be addressed first and how much risk you can afford to take.

2. Build Up Your Savings

If there’s one thing the last two years have taught us, it’s that it’s crucial to prepare for the unpredictable. Whether it be a pandemic, a lost job, or rising rates of inflation, sufficient savings can mean the difference between staying afloat during uncertain times and not having enough when you need it most. 

If you’re not saving already, take steps to start putting a portion of your income away every month. Usually 10-15% of pre-tax income is a good guideline. Ideally, it is recommended that most people should have at least 3-6 months’ worth of non-discretionary expenses saved in a highly liquid, easily accessible emergency fund before saving toward other goals. Either way, consistent savings are the cornerstone of any solid financial plan.

3. Reevaluate the Risk in Your Portfolio

As mentioned in Step 1, risk is fundamental to investing. Even “investing” by hiding cash under your mattress involves risk, since there’s always the chance of a break-in or increased inflation eating away at its value. To jump-start your financial plan in 2022, be sure to reevaluate the amount of risk you are taking in your overall portfolio. 

It’s not uncommon for a portfolio to become unbalanced as the market ebbs and flows. What may have started out as a 60/40 allocation between stocks and bonds can easily become a 70/30 or 80/20 allocation, which is a significant difference in risk level. You may also find that you are too heavily concentrated in one type of asset or in one company’s stock. If this is the case for you, rebalancing and diversification should be explored. 

Though risk is fundamental to investing, it’s also crucial that you aren’t overexposed to unnecessary risks. Take steps to evaluate your risk tolerance, based on your unique financial circumstances, stage of life, and personality, and be sure your investments align.

4. Make a Plan With a Financial Professional

Regardless of where you are in the planning process or what goals you have set for your financial life, we are here to support you, guide you, and navigate any financial challenges you may face. Partnering with a financial professional is a great way to take control of your finances and get a jump-start on the future. 

At The Rosamond Financial Group, we have the tools and expertise to help you set financial goals, build up your emergency fund, and reevaluate your risk level. If you’re ready to start planning for the new year, book a free introductory meeting online today!

About Preston

Preston Rosamond is a financial advisor and the founder of The Rosamond Financial Group Wealth Management, LLC with nearly two decades of industry experience. He provides comprehensive wealth management and financial services to individuals, professionals, and families who enjoy simplicity and seek a professional to help them pursue their goals. Preston personally serves his clients with an individual touch, a sincere heart, and his servant’s attitude is evident from the moment you meet him. Learn more about Preston or start the conversation about your finances with him by emailing smrosamond@rosamondfinancialgroup.com or schedule a call with our online calendar.