Heading into the New Year, it’s time to take stock of your budget, debt and investments—and check them against your financial goals. These six steps can get you started.
The new year brings an opportunity to reflect on the past year and to set new goals for the year ahead. If you’re considering setting physical and mental wellness resolutions, consider adding financial wellness resolutions as well.
Here are six ways to kick off the year with fresh perspective to help meet your financial goals:
Start the year by revisiting your budget. Assess your average monthly income, as well as your fixed and variable expenses, and determine your financial priorities for 2022. For example, maybe you’re looking forward to putting extra income toward a bucket-list vacation over the summer. Or perhaps you’re planning to save even more for retirement. Understanding your top priorities can help you develop the ideal budget for you.
Having trouble getting started? Morgan Stanley’s financial management tools, available on Morgan Stanley Online, can help you track income and expenses and create custom budgets to optimize how you put your money to work. If you haven’t enrolled in Morgan Stanley Online, visit morganstanley.com/online to register or speak to your Financial Advisor to help get you started.
If you haven’t done so already, now’s a good time to double-check that you have sufficient savings for a rainy day. Not only can an emergency fund help you to avoid having to liquidate portfolio assets at depressed prices during volatile markets, it can also help keep you afloat if your employment situation changes. According to the U.S. Bureau of Labor Statistics, a record 4.3 million workers quit their jobs in August 2021—often without new opportunities lined up—in what economists have dubbed the “Great Resignation.” Having an emergency fund—ideally three to six months of living expenses in a safe, liquid account—may provide you with a comfortable cushion and greater focus if you need to pursue new opportunities.
Even if you’re already good about managing debt, consider taking steps to help reduce and consolidate it further. For example, in today’s labor market, if you’ve gotten a raise or found a new, higher-paying job, consider applying the extra income to any balances with high interest rates. Then, think about consolidating any remaining debt, which can let you swap the varying interest rates on multiple loans, credit lines or cards for a potentially lower rate on a single loan. Reducing the number of loans you carry can also help simplify your financial life and ease money stress. You may want to ask your Financial Advisor about possible strategies.
According to Morgan Stanley’s 2021 Investor Pulse Poll among U.S. investors, 43% of respondents overall—and 50% of women—reported that their emotional health suffered because of COVID-19. Additionally, 41% of people said they felt less in control of their life, and another 40% said their sense of security had diminished as a result of the pandemic.
Use the New Year as an opportunity to feel more in control, mentally and financially. Consider taking advantage of any employer wellness resources for physical, mental or financial health. Many companies offer financial-education programs and digital learning tools, which can supplement the advice you receive from a Financial Advisor. Using these tools can help you not only bring a sharper version of yourself to the job, but also set you up to make better use of other workplace benefits, such as a retirement plan, equity compensation or group insurance, if available.
As you begin a new year, be sure to check whether you’re still tracking toward your goals, such as saving and investing for a comfortable retirement. If you’re off track, work with your Financial Advisor to figure out why—and how you can get back on the right path. If you’re still on track with your goals, talk with your Financial Advisor about new goals you want to work toward.
For example, if you temporarily reduced your retirement contributions to free up income to cover emergencies in 2020, how did that impact your retirement savings? In 2021, were you able to restore your contributions to a workplace retirement plan or individual retirement account back to their previous levels? In 2022, can you contribute more? Your Financial Advisor can help you look holistically at the year ahead and assess your progress towards your goals.
Morgan Stanley’s Investor Pulse Poll also reported that 67% of all respondents—and 77% of female respondents—feel it’s important that the companies they invest in have policies in place to promote diversity, equity and inclusion. Not only that, 63% of all respondents (and 72% of women) said having people from diverse backgrounds in leadership positions mattered to them.
Whether you’re interested in enhancing diversity at companies, tackling climate change or helping to alleviate poverty, your Morgan Stanley Financial Advisor can help you find opportunities to align your investments with your values. This year, consider adding more impact to your investments while also potentially generating positive financial returns.
Connect with your Morgan Stanley Financial Advisor to discuss your financial goals for 2022 and more.