Five ways to improve your financial health in 2022, according to a personal finance expert

Personal finance expert Jean Chatzky joins Yahoo Finance Live to provide tips for reaching financial resolutions in the New Year.

Video transcript

It’s time for those New Year’s resolutions. And if getting your financial house in order is one of them, you’re in luck because personal finance expert Jean Chatzky is here now with ways to make the New Year a reality. a profitable year. We would also like to mention that she is the host of the new radio show and podcast “Everyday Wealth” with Soledad O’Brien. Always nice to see you, Jean. Happy new year.

JEAN CHATZKY: Happy new year to you too. Nice to see you.

So before you even make those New Year’s resolutions, you say it’s important to do two things. Embrace your current reality and don’t compare yourself to others. Sometimes easier said than done. Why are these two things so important?

JEAN CHATZKY: We need to know where we start to get where we want to go. And, really, it’s a matter of financially mastering three touchpoints. Where does your money come from? What is happening ? What comes out? And where is it going. I know a lot of people try to stay away from numbers. But I find the numbers very liberating because they don’t lie. They are honest. And once you understand, you can start moving forward.

And “you” is the key word here. When it comes to your money, everyone has different goals. Everyone has different goals. And you should use your personal resources as a tool to get what you want. If you can exclude the rest of the world, whether that means excluding your co-workers and friends or that means excluding social media because they tell you to buy certain things or wear certain things, you are going to be much more successful. to achieve your ultimate goals.

And then, in addition to setting goals, you also say it’s a good idea to go down that list to automate your savings.

JEAN CHATZKY: Right. So, when it comes to our goals – and the problem with many New Year’s resolutions is that they’re way too big. If you’re doing a dry January, for example, like so many people do, I think it’s best to think of it as four dry weeks or 31 dry days, because it’s much easier to hit those goals. And it’s the same with your money. When it comes to saving, it’s fine to say, hey, I want to save $5,000 this year. It’s much easier to say, I want to save $100 a week, or I want to save $16 a day, or however you want to break it down.

And then yeah. Automate it. Human beings are creatures of impulse. We see something. We want it. We buy it. And technology, as far as our money is concerned, just made that so much easier. Automate your savings. Let’s take the example of a 401(k), which is the most effective savings vehicle we have, and just put it in place in other places in your life. So if you’re putting money into a health savings account, or an IRA, or a 529, or a vanilla savings account, automate those contributions so they happen every time you get paid.

And some of these accounts, of course, also offer tax savings. So you really save even more when you think about it. You also say – this is another one that’s easier said than done – ask for whatever money you want. Are you talking about going to your boss and asking him for a raise? And what is the best and most efficient way to do it?

JEAN CHATZKY: Yeah. That’s exactly what I’m talking about. And the employment figures that came out yesterday showed that a lot of people are actually doing it. They do it by quitting. We had more people quitting their jobs in November than we’ve ever seen before. Many of them do not leave the labor market for good. But they leave in search of higher paying opportunities.

And changing jobs is probably the best way to get a substantial increase in your salary. We’ve covered this quite extensively on hermoney.com, particularly as it relates to the idea of ​​women closing the pay gap. And I have a number of suggestions. But you want to make sure that when you go to your boss at work, you’ve taken the pulse of the current work environment.

How much would someone with your skills get paid if they got a new job on the open market? How much do other people in your business get paid, if they’re willing to talk about it? And then you have data and information and your productivity history for that business. It’s not about wanting a raise or needing a raise. It’s about what you’ve done for the business that you can present to this manager.

Jean, I’m going to suggest one more to add to this list of top tips, and that’s to just say no, which I wish I could do to my kids who are always asking for financial help. But I also want to move on to some of your recommendations. And one of them is to save money. Make your goals specific, tangible and with a timeline. How are we going to do this?

JEAN CHATZKY: So once you have an idea of ​​the goal, the internet can be your best research friend. So maybe it’s retirement. You are trying to figure out how much you will need to retire on a certain date. 10 times your salary when you leave your job is a good number to aim for. But maybe it’s a smaller goal. Maybe you are looking to go on vacation when we are all cleared to travel freely again or feel comfortable traveling freely again. Go online. Research these vacations. Determine how much it will cost. Then figure out when you’re likely to take it. And then just do simple division.

The number of weeks or months between now and when you save. Divide it. You know how much you need to set aside each month to get there. And all lenses work the same way. And then track your progress as you go. It’s a bit like running a race. It’s like running or training for a marathon. We can be satisfied with the progress we make before reaching the actual goal. We just have to allow ourselves to see it. And so that might mean, if you put money in a savings account, or in a 401(k), or an HSA, or a 529, once a month, take a little tour of your accounts. Visit them. I know that sounds a bit silly. But go ahead, take a look and see how your money adds up.

Great, solid, smart advice as always. Jean Chatzky, thank you very much. Again, the radio show and podcast called “Everyday Wealth”. with Soledad O’Brien. Happy to see you.

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