10-Step Financial Checklist for 2022
The new year is upon us, which means it is the perfect time to create and finalize a financial checklist for 2022.
2021 appears to have been a better year financially for many American families. Why? Because many started financial planning for the first time.
According to a study by Northwestern Mutual, “A third (32%) of Americans say their financial discipline has improved during the pandemic, and 95% say they expect their newfound habits will stick after the health crisis subsides.”¹
The study also found, “Nearly one out of five (17%) U.S. adults aged 18+ say they didn’t have a financial plan before the pandemic, but now they have one in place. Overall, 83% of people were prompted to either create, revisit, or adjust their financial plan during the pandemic.”²
If you were one of those Americans who used the pandemic to improve your financial life, keep the ball rolling with this 10-step financial checklist for 2022.
And, if you struggled financially in 2021, use our 10-step financial checklist for 2022 to turn things around.
#1 Set Financial Goals for 2022
The first step in the financial checklist for 2022 is to set clear goals.
There is a reason why – If you don’t set goals, you likely won’t meet these goals.
The problem for many people is that they find goal setting overwhelming. They are unsure of what goals to set or what they can do to make those goals attainable.
When it comes to setting financial goals for 2022, pay careful attention to savings and debt.
- Do you need to save money to make any big purchases?
- How much debt do you want to have paid off?
- What are your retirement savings, investment, or general savings goals?
Write your goals down, and then determine how much money you need to meet each particular goal and the date you want it by.
For each goal, divide the total amount needed by the number of months until your goal date, and that will give you the amount you need to save each month.
Begin by setting a goal for building an emergency fund.
This is a must-do on the financial checklist for 2022.
Experts advise people to save 10-15% of their income.
Let’s say you’re currently saving 8% of your income in your 401(k). Take the remaining 2-7% and fund an emergency savings account.
If you’re already saving 15% of your income, see if you can put an additional 1%, 5%, or even 10% into your emergency fund. You’d be amazed how saving an extra 1%, 2%, or even 3% extra adds up over time.
The next goal on the financial checklist for 2022 addresses debt.
Unfortunately, even though many Americans began paying closer attention to financial planning in 2021, debt is still a serious problem.
The Federal Reserve Bank of New York posted this headline, “Total household debt climbs to over $15 Trillion in Q3 2021, driven by new extensions of credit. Credit card balances increase again by $17 billion in the third quarter of 2021.”³
Debt prevents you from meeting your savings goals and makes it nearly impossible to live the retirement of your dreams.
No matter the size of your debt, make 2022 the year you get out of debt.
If you aren’t sure how you can pay down the debt and save at the same time, take on a side hustle. Designate the money you make from your side hustle to go toward your debt.
[Related Read: Close the Gap on Financial Goals with a Side Hustle]
#2 Budget like a Pro
A significant part of the success of the financial checklist for 2022 lies within your budget.
You cannot achieve financial goals without a plan – and that plan requires a budget.
Review your 2021 spending habits and see where you overspent, where you fell short of your financial goals, and where your emergency savings were lacking.
Then, create a budget for 2022 that prevents you from making the same mistakes.
Don’t make it and forget it. Schedule time upfront to review at the end of each month so you stay on track.
#3 Pay Yourself First
If you want 2022 to make a big difference in your financial future, pay yourself first.
When you get paid, before you pay for anything else (pay bills, buy groceries, or buy anything), pay yourself first by contributing to your savings and investments.
[Related Read: 4 Things That May Help Maximize 401(k) Savings in 2021]
If you have a 401(k), your retirement savings are automatically taken out of each paycheck. If you have an Individual Retirement Account (IRA), you should be paying into this first as well.
If you don’t have much left to spend at the end of a pay period, don’t fret. You’re building a nest egg for the future!
It boils down to this: Would you rather sacrifice a little now, or sacrifice the rest of your life? The choice is yours.
#4 Get Your Taxes in Order
Tax season comes every year – don’t be surprised by it!
Instead, get your taxes for 2021 in order now.
If you know you will owe taxes for 2021, start saving now. Go back to your budget and make sure tax savings are added to it for 2022.
If you pay quarterly tax payments, make note of the following 2022 due dates:
- Quarter 1: April 15, 2022
- Quarter 2: June 15, 2022
- Quarter 3: September 15, 2022
- Quarter 4: January 15, 2023
Also, don’t forget that Quarter 4 estimated taxes for 2021 are due January 15, 2022.
It’s wise to speak with an accountant to make sure you are on track with estimated taxes so you won’t face any penalties or unexpected large tax bills.
Another tip – If you plan to receive a refund from the IRS, invest it instead of spending it.
Whether you invest it in your 401(k) or IRA, or use it to fund your emergency savings, every little bit you save now may help you in the future.
#5 Plan for Retirement
A major part of the financial checklist for 2022 is planning for retirement.
You cannot just sit around and hope you’ll have enough money for retirement – you must plan accordingly.
No matter your age, you need a plan now so you know exactly how much you need to save to retire comfortably.
The sooner you start planning for the retirement you want, the more likely you will end up where you want financially.
If you don’t already have a plan in place, sit down and write out the answers to these questions:
- At what age do you want to retire?
- What do you want your retirement to look, feel, and be like?
- How much money will you need to have a fulfilling, comfortable retirement?
- How much do you need to save right now to ensure you will reach your goal?
If you’re stuck, seek third-party advice to come up with a financial plan to achieve your retirement goals.
For those of you who already have a plan in place for retirement, take time to see what you can do to make it even better, such as boosting contributions.
#6 Do Something about Your Old 401(k)
If you have changed jobs, you may have left your 401(k) behind with your previous employer.
It’s not their job to handle it for you. It’s yours.
There are several disadvantages to leaving your 401(k) behind:
- Your account will remain subject to plan rules.
- You will continue to have limited investment options.
- You will have another account to keep up with.
- You will have to pay ongoing fees.
It’s also costly to leave behind an old 401(k).
Capitalize recently published a white paper The True Cost of Forgotten 401(k) Accounts stating, as of May 2021, there are an estimated “24.3 million forgotten 401(k)s holding approximately $1.35 trillion in assets, with another 2.8 million left behind annually.”⁴
And that leaving behind a 401(k) with a past employer “has the potential to cost an individual almost $700,000 in foregone retirement savings over a lifetime.⁵
For these reasons, you may want to consider rolling over an old 401(k) to an IRA or to your current plan.
#7 Consider Your Retirement Plan Contributions
As you work on your 401(k) for your financial checklist for 2022, take time to consider your contributions.
How much are you currently contributing to your 401(k), IRA, or other retirement accounts?
Is it possible for you to contribute an additional 1%? 3%? 5% each month?
Employee 401(k) contribution limits for 2022 are $20,500. This applies to 401(k), 403(b), most 457 plans, and the federal Thrift Savings Plan. For those age 50 and older, the 401(k) catch-up contribution is $6,500.
Individual retirement account (IRA) contribution limits stay the same for 2022, with a $6,000 maximum contribution limit. This applies to Roth IRAs as well. The catch-up contribution for people age 50 and over remains the same additional $1,000.
As part of the financial checklist for 2022, look for ways to maximize your contributions to your 401(k). Try to get as close to the contribution limit as possible.
Additionally, make it your goal to take full advantage of your employer’s 401(k) match.This is one of the easiest ways to maximize your 401(k) – it’s like getting free money!
[Related Read: Retirement Plan Contribution Limits for 2022]
#8 Rebalance Your 401(k)
Next up on our financial checklist for 2022 is to rebalance your 401(k).
If you aren’t rebalancing your 401(k) account allocations quarterly, you may be missing out on earning more and keeping more of your hard-earned retirement savings.
Unmanaged allocations may experience much larger losses in down markets and may miss the opportunity for growth during good markets.
We recommend rebalancing your account allocations every quarter, or four times a year. This way, you can make the appropriate changes in order to stay on course with your retirement savings goals.
#9 Max Out IRA Contributions
Individual retirement account (IRA) contribution limits are $6,000 for 2021 and 2022. The catch-up contribution for people age 50 and over is an additional $1,000.
You can contribute the maximum for 2021 until April 15, 2022. Make it a goal to fully fund your IRA before this deadline. This is more likely to happen if you add contributions to your budget.
If you haven’t already, set up automatic monthly payments into your IRA.
#10 Talk to Financial Professionals
Even though it is last on this financial checklist for 2022, it is one of the most important steps.
David Blanchett, Head of Retirement, CFP, CFA, of Morningstar reported that participants that received expert guidance had as much as 40% more income during retirement versus those who received no help at all.⁶
We don’t know anyone who would turn down the possibility of earning 40% more income.
Whether you have already started saving for retirement or are struggling to get going, a professional can help you figure out the best way to manage your money, get out of debt, and boost retirement savings.
The sooner you reach out for help, the better off you (and your future self) may be.
Don’t know where to start?
Download our no-cost guide: The Different Types of Licenses Financial Advisors Have and What They Mean to You .
- David Blanchet, Head of Retirement, CFP, CFA, Morningstar 2014, “The Impact of Expert Guidance on Participant Savings and Investment Behaviors”