New Year, new you? Regardless of how ambitious your resolutions might be, you should consider adding “set personal financial goals” to your list.
According to Fidelity’s 2022 New Year’s Financial Resolutions Study in October, people who set financial goals in early 2021 are more optimistic about their future. Eighty-one percent of people who made resolutions also believe they will be financially better off in 2022 than those who do not make any financial resolutions.
Setting New Year’s Financial Resolutions in 2022
If you haven’t done so yet this year, give yourself a financial checkup. Did you overspend over the holidays and possibly have debt? What is the current state of your retirement plan? Have you set a realistic budget for yourself? How much of your income went towards investments? These are all questions that can help you start the new year with a clear view of how you plan to improve your financial shape.
First thing’s first
- Determine Your Objectives
The first stage in your financial checkup is to assess your financial objectives. Did you reach the financial goals that you set for yourself last year? If not, how did you fall short and why? Did you revisit or adjust your financial goals during the year? If so, taking note of that will better prepare you for any changes that might affect your objectives this year.
- Evaluate Personal Situation Changes
Have you experienced any changes in your personal situation? Possibly welcoming a new child into the family, purchasing a new home, moving, rent increases or decreases, marriage, divorce, and death of a loved one can significantly impact your income and lifestyle. If you haven’t already, you might have to adjust your budget — curb your spending habits, hold onto savings, and allocate more to investments. Remember — many lifestyle changes, such as a growing family, can impact your taxes. Preparing for these changes before they happen will make the transition much easier.
- Get Ready for the Unexpected
Death is never a fun topic. However, preparing a will and estate strategy can ensure your beneficiaries are taken care of and the proper distribution of your assets accordingly. If you don’t already have life insurance, you should look into it sooner than later. You’ll likely have lower premiums now vs in 5 years.
- Assess the performance of your investments
Let’s face it — 2021 was a rollercoaster, and like many other people who have invested in stocks, bonds, or mutual funds, you have probably felt the pang of anxiety watching your portfolio value drop. The thing to ask yourself, though, is how were your returns compared to the rest of the market? If you think your investments are a lost cause, it’s time to sell them.
Also, the end of the year is an excellent time to take advantage of tax breaks. The silver lining that comes with losses is that you can offset any capital gains. Do you know your 2021 RRSP contribution limit? You have until March 1, 2022, to top it up.
- Examine Your Debts
Millennials have the highest debt out of any other generation, and according to a study by Experian, personal debt hit a new record at the peak of the pandemic. Consider how well you’re doing with debt management as part of your annual financial assessment. Examine your debt-to-income ratio in particular. Is your credit card debt down this year? Stop leaks and pay off high-interest loans first. Investing is hard when you’re also paying credit card debt. Mortgage rates are low, so it might be worth it to explore refinancing. While it might not seem like a lot, even a slight reduction in interest rates can make an impact on the life of your mortgage.
- Rebalance Your Investment Portfolio
Last year wasn’t much different than the year before. Some assets outperformed, while others underperformed. Rebalancing your portfolio to its original or updated asset allocation allows you to lock in benefits from the sectors with the strongest returns while purchasing shares in industries that lagged behind last year’s winners. With the emergence of Omicron, it’s hard to see what 2022 has in store. Investing in gold serves as an effective hedge against currency volatility and inflation. It is also an excellent strategy to diversify your portfolio because a falling stock market does not always signal a reduction in gold prices.
How Do You Keep Your Financial Resolutions?
Create realistic goals for yourself and remind yourself why you made it in the first place. Transferring funds from your chequing account to separate, inaccessible savings or investment account, or having a portion of your income routinely put in a savings account, can also help to eliminate temptation.
Bottom line:
It would be a good idea to create a checklist to keep track of how you’re performing during the year so you can make any required changes. If you have a financial advisor, consider meeting with them to discuss your goals and objectives. Remember, gold mining stocks typically move in lockstep with the value of gold, and if 2020 told us anything, it’s that gold investment products are truly safe-haven investments. Contact our investor relations team for more information on how O3 Mining can deliver long-term value and returns. We would love to hear from you.
Sources: https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/about-fidelity/2022_Fidelity_FinancialResolutionsSheet.pdf
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