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How to Reset Your Finances for 2022

January 14, 2022

Happy New Year! 🎉

The new year can be a great time to reset your finances, and Truebill is here to help! Here are five ways to help improve your finances in 2022.

1. Change how you think about your finances 

Many people find the process of budgeting to be restrictive when it's really a roadmap to help reach your financial goals over time. By allocating your income to pay down debt, save, and/or invest consistently, and sticking to that plan, you're helping yourself build your best financial life. So if the word "budget" doesn't work for you, consider calling it something else, like a "financial roadmap" or "prosperity plan" to help keep you motivated.

2. Update your budget in Truebill

Did you know that you can start a budget in the Truebill app, separate from the spending tab? While the spending tab will show you where your money is going, it's great to have a budget in place to make sure you're progressing towards your goals! To get started, navigate to the Spending tab and click "Start a Budget." If you've already built in a budget, tap the gear on the top left side of your screen and click "Manage Budget" to update it for 2022.

From the "Manage Budget" screen, you can either set up or modify the amounts you have set for different budget categories, like auto and transportation, groceries, or shopping, for example. Just tap"+Add a Budget" button to include as many categories as you'd like. Don't see something you'd like to have? You can set up a custom category by visiting your recent transactions, selecting the in on the left of the screen, and tapping "Create a Category."

As you add in budget categories, you'll see what's left to contribute towards specific goals in "Projected Savings" at the bottom of your screen.

Did you know?

Disagree with how Truebill categorized a particular transaction? You can change it by tapping the category icon and even set up a rule to make sure it's categorized the same moving forward.

3. Set your goals for 2022

Automate your savings 💰

If you haven't already, now is a great time to set up a savings goal using Truebill's smart savings. You can even set up multiple accounts to separate your emergency savings from other goals, like saving for a downpayment on a home. 🏡

A smart savings account from Truebill is so much more than your standard savings account. Using our magic-powered AI 🔮 a smart savings account can 1) identify how much you should save towards a specific goal and 2) automatically transfer funds to that account for you. You can also let us know if you prefer to set aside a specific amount on your own (instead of us doing the work for you). Your smart savings account is FDIC insured in a U.S. bank account, and you can withdraw your money at any time. Truebill even sets up a buffer to ensure we don't overdraft from your account, pausing any automatic transfers until we're sure the coast is clear. 

Accelerate Your debt repayment 💳 ✂️

So long as you have sufficient emergency savings in place, the start of a year is a great time to determine whether or not you might be able to accelerate your debt repayment. This means that in addition to making the minimum payments on your debt, using either the Snowball or Avalanche method, you'll make an additional payment to pay down the principal balance, saving the amount you'll pay in interest over time. Even a small payment of $25 will help you accelerate your debt payoff and save you money in interest over time.

Have federal student debt? Now is an especially good time to accelerate your debt payment, as there is 0% interest till May 1, 2022.* This means 100% of every payment will go directly to your principal balance instead of paying down interest, which can save you thousands of dollars over time! 

Note: We do not recommend accelerated student debt repayment if you intend to apply for Public Student Loan Forgiveness

Revisit your investments 📈

In addition to any savings goals, revisit your investment contributions for 2022. This might include investing for retirement as well as other investment goals. Did you know that using your 401k or employer-sponsored plan to "save" for retirement means that you're already investing? Hooray! 👍🏼 The table below breaks down the different types of tax-advantaged investment accounts you might use to invest, as well as the maximum limits you can contribute in 2022.

What's a "tax-advantaged" account? These types of accounts provide tax benefits that allow you to grow your money much faster than a standard brokerage account, so take advantage of them if you can! You can even have more than one tax-advantaged account (like a 401k and an IRA, for example).

Did you know?

You can still contribute to an individual retirement account (IRA) for the 2021 tax year till April 15, 2022, to take advantage of the tax savings for both 2021 and 2022! Just make sure to specify that when making your contribution, as most financial institutions usually will assume you're contributing to the current year, not 2021.

If your employer offers a 401k, 403b, 457, or Thrift Savings Plan, make sure to take advantage of any potential employer match! An "employer match" is money that your employer agrees to contribute to your retirement account to match your contributions up to a certain amount (the exact amount will vary from employer to employer). Not sure if your employer offers a match? Check with your human resources (HR) department to make sure you don't miss out.

Type of Account Employer-sponsored? Potential for Employer Match? Tax-advantaged? Annual Max. Income Limit (MAGI*) Annual Max. Contribution Limit Average Monthly Contribution Limit
Traditional 401k/403b/457/Thrift Savings Plan (TSP) Yes Yes Yes None $20,500 (plus $6,500 if age 50+) $1,708.33 (plus $541.66 if age 50+)
Roth 401k/403b/457/Thrift Savings Plan (TSP) Yes Yes Yes None $20,500 (plus $6,500 if age 50+) $1,708.33 (plus $541.66 if age 50+)
Traditional Individual Retirement Account (IRA) No No Yes None $6,000 (plus $1,000 if age 50+) $500 (plus $83.33 if age 50+)
Roth IRA No No Yes Reductions start at $129,000 (single) or $204,000 (married, filing jointly) $6,000 (plus $1,000 if age 50+) $500 (plus $83.33 if age 50+)
Health Savings Account (HSA) Sometimes Yes Yes None, but does require a High Deductible Health Plan (HDHP) $3,650 (plus $1,000 if age 50+) $304.16 (plus $83.33 if age 50+)
Standard Brokerage Account No No No None None None

*Modified Adjusted Gross Income (MAGI) refers to your adjusted gross income with any allowable deductions added back in.

4. Review subscriptions and lower your bills 

Now that you've updated your budget let's see where you might be able to save even more! Use Truebill to review your subscription services, cancel any you don't need, and even negotiate your bills to a lower cost. We recommend doing this every three months throughout the year to make sure you're not missing out on any potential savings. If you identify any savings, make sure to go back and adjust your budget and goals for 2022! For example, you might want to set up a smart savings account to help you save for goals automatically, increase your debt payments, or update an existing category, so you have more wiggle room when it comes to your spending.

Did you know?

A 2021 study from West Monroe of 2,500 consumers reported that 89% underestimated what they spent on monthly subscription costs. On average, they spent 3.4x more than what they had guessed.

5. Review your credit report for inaccuracies 

Now that your budget and goals are squared away, the last recommendation to make sure your finances start on the right foot is to review your credit report for any inaccuracies. More detailed than your credit score, your credit report contains more specific information regarding your payment history, credit utilization, any delinquencies, length of credit history, and other factors that comprise your credit score.

Your credit score is important because it impacts not only whether you're approved for credit but also the interest rate. Your credit report also has the potential to impact other areas of your life; a landlord or potential employer (in states where it's legal) may run a credit history check during the hiring process. That's why it's important to review your credit report from time to time in case there is a discrepancy or an account you don't recognize in the case of identity theft. If you identify an issue, it's important to notify the credit reporting agency of the discrepancy to correct and protect your information.

You can view your credit score for free and full credit report (for premium members only) by tapping "Credit Score" on the Dashboard tab.

We hope these tips are helpful in resetting your financial goals for 2022!