How to make 2022 the year you get your finances into shape

If you’re anything like me, I’m sure you’ve made a New Year’s resolution or two over the years.

And I wouldn’t be surprised if at least one of them was to save a bit more money and spend a bit less.

At the start of every year at ANZ we see more people opening savings accounts, either for themselves, their kids or grandkids.

We typically see 40% more new accounts being opened in January, compared to the previous month.

But getting your finances into shape - and honouring that New Year resolution - is a bit like promising yourself you’ll eat better or get more exercise.

Getting started takes commitment. Sticking with it is even harder.

So if you are one of the many people who promised to focus on your finances in 2022 –here are some tips to help you get started and to make your resolutions more than just that.

Stop – and take a look at your finances

Before you start thinking about your savings, you need to make an honest assessment of the money you have coming in and the money you have going out.

It needn’t take you too long. Just pick a day when you know you will have some quiet time.

We have a handy online budgeting tool to help you.

You don’t have to bank with ANZ to use it; it’s free and we don’t save any of your responses.

Set realistic savings goals

It helps if you set achievable goals. If you’re too ambitious you might be setting yourself up to fail.

You’re far more likely to reach your target by breaking it down into manageable pieces.

We call this the SMART (Specific, Measurable, Achievable, Realistic, and Timely) approach.

"It helps if you set achievable goals. If you're too ambitious you might be setting yourself up for failure."

Ben Kelleher, Managing Director, Personal Banking

Create a rainy day fund

You might want to open more than one savings account. One might be for longer term goals, while another could be your rainy day fund.

The rainy day fund is there to cover unexpected expenses – like a medical scare or your car breaking down.

$500 can make all the difference. If you can make it $1,000 or more that is even better.

Our research has found that having a savings buffer of at least $1,000 was associated with higher sense of financial wellbeing.

When we talk about financial wellbeing we aren’t talking about your knowledge of financial products.  Rather, we mean your ability to pay your everyday expenses and to do so into the future.

Two actions can make a big difference to our sense of financial wellbeing. One of these is active saving. The other behaviour that can be really helpful is to not borrow for everyday expenses.

A rainy day fund of just $1000 help you tick both these boxes.

Reduce your debt

Reducing debt isn’t just great financially, it may also do wonders for your general wellbeing.

Taking action as part of your 2022 plan will give you a real sense of purpose and control.

Multiple debts can present more of a challenge. In which case, you might want to look at the merits of consolidating your debts.

Keep track of your spending

Keep records of all your financial transactions together in one place – from bank statements to investment statements.

Check your statements regularly, and talk to your financial institution if there are any inconsistencies, or if there is anything you don’t understand.

Keep a budget, review it regularly and make sure you include a plan for regular savings.

By knowing what you earn and what you spend, you’ll know where you stand and where you’re heading.

This article first appeared on Stuff.co.nz.

The material is information only and you should seek professional advice about your circumstances. While we’ve taken care to ensure the information is reliable, we don’t warrant its accuracy, completeness, or suitability for your intended use. To the extent the law allows, we don’t accept any responsibility or liability arising from your use or reliance on this information.