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One of the most common resolutions each January is to have a better grasp on finances in the coming year. Whether it’s your resolution or you’re just looking for some financial tips, we hope these strategies to improve financial wellness are helpful to you in 2022.

1. Automating to Save Time (and Headaches) 

Automating your finances takes the headache out of financial tasks. Let’s look at recurring contributions to an investment account as an example.

Traditionally you would have to:

  • Try to time the market 
  • Log in to your account
  • Manually deposit money
  • Make your stock picks
  • Do it all over again next time

With recurring contributions, you set it up once and let your portfolio grow from there. You can also take it another step further and use a customized automation tool like Smart Transfers by M1 Finance. This allows you to set up automation rules that keep your money moving how you want.

You can use automation in many more areas of your financial life, not just investing.

You can set up savings rules in your bank account that automatically send a percentage to your savings account on payday. You can set up autopay on all your monthly bills.

We live in an increasingly automated world, and if you haven’t automated your finances yet, now is a great time to start.

2. Diversifying to Minimize Risk

You’ve heard people say, “don’t put all your eggs in one basket.” Whether they know it or not, they’re promoting diversification.

Diversification is one of the cornerstones of financial wellness. This method, used by investors for generations, reduces risk by spreading investments across various categories.

Whether using different account types or investing in various sectors, diversification is a critical part of long-term financial health because it lowers risk.

Here’s a real-world example of how diversification protects investors:

If you’re only invested in two companies and one crashes, you would lose half of your investments.

If you’re invested in 20 companies, and one crashes, you would lose 5% of your investments. Think about what that difference would mean for your portfolio.

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Keep in mind that diversification can vary across portfolios. You may invest in different stocks, you may invest in different sectors, you may explore alternative assets.

3. Learning Something New About Finances

Whether you’re a savvy market veteran or opening your first bank account, learning more about finances can help. 

Here are a few ways for you to continue your financial education: 

  1. If you're a reader, pick up one of the following 12 smart personal finance books to add to your reading list.

  2. If you’re looking to sit back and be entertained while learning, check out finance movies like The Big Short or Too Big to Fail.

  3. Are you a podcast fanatic? If so, try out The Dave Ramsey Show or Women and Money.

  4. Looking for a bite-sized newsletter that brings learning to your inbox? Subscribe to some like Morning Brew or Easy Money.

  5. Looking for something a little more advanced? Check out Khan Academy or edX’s Finance for Everyone.

No matter how you learn, the financial knowledge you pick up can help you become more confident in your decisions and give you peace of mind.

4. Taking Advantage of Retirement Accounts

There’s a reason why you hear everyone from financial advisors to parents talk about contributing to retirement plans: they are great savings vehicles!

Let’s look at an example of how IRAs can grow over time with compound interest:

If a 23-year-old recent college graduate makes a $5,500 contribution each year and gets a 6% annual return, they will see their contribution grow to $1 million by the retirement age of 65.

Whether you’re opening your first IRA or maximizing your contributions, be sure to get the most out of your IRA. In the spirit of the holidays, it’s a great way to give your future self a gift.

5. Scheduling Regular Checkups For Accounts

Scheduling a regular financial check-in for yourself can help avoid mistakes and ensure everything is in line with your current goals.

Whether it is a monthly, quarterly, or annual check-in, you can use this time to:

  • Review your accounts
  • Ensure your budget is accurate and make any necessary changes
  • Consolidate investment accounts or bank accounts
  • Make sure you’re on track to hit your goals

You’re Ready For a Financially Strong 2022

Now you’re armed with knowledge and ready to have your best financial year ever in 2022. Remember that just like investing, these habits may not make a huge change overnight. But with discipline and commitment, these strategies can seriously help investors over time.

If you’re just getting started investing or are looking for more out of your brokerage, sign up for M1. M1 Finance is the Finance Super App that gives you the tools you need to invest, borrow, spend, and build the future you want.

'All investing involves risk, including the risk of losing the money you invest. Past performance does not guarantee future performance. Brokerage products and services are offered by M1 Finance LLC, Member FINRA / SIPC.'