This is an article “How 2022 Should Change Your Money Habits” by Marc Primo
Another new year has arrived and, as usual, people from all walks of life are reevaluating how to manage their finances, earn, and save more in 2022.
However, just like in the past two years, this one is shaping up to be financially challenging. With the health crisis disrupting trends in the way people purchase products, along with inflation rates burning holes in our pockets, new money habits are in order to turn hurdles into long-term opportunities.
Everyone starts by making goals. Many of us reflect on our spending and try to make a few tweaks to save more, moving forward. Of course, recent years have been anything but normal, and the times call for some analysis into which aspects of our finances need more focus.
Whether we are looking to invest, pay off debt, or even develop better personal relationships, you'll need to spend this thing that supposedly makes the world go round on the right stuff.
Shun the new year's resolution ideas (only 8% can achieve them anyway), and focus on what you can control this year. To give you a boost, here are some surprising financial insights and the new money habits you'd want to develop for 2022:
Make the most out of 'forced savings'
With some shops still closed for business, work at home orders crawling at a snail’s pace, and worldwide lockdowns implemented for much of the year, many people find themselves with limited options to spend their money. These limits result in 'forced savings' and a drastic change in spending.
In the UK, consumers spent 11% less than they usually do during the pandemic as operating industries temporarily shut down, including tourism and many forms of entertainment. However, this does not mean that people have more purchasing power due to 'sectoral inflation.' Prices increase in various commercial sectors due to the law of supply and demand, and how the COVID-19 disruption affected those industries.
Nonetheless, these forced savings can accumulate as long as you limit your purchases to essential household items, rather than go on a shopping spree online. Come to think of it; the pandemic is the perfect time to outline your investment strategies using the money you have saved by using automated online savings accounts or consolidating debt to gain financial freedom. While it's similar to a piggy-bank approach, making the most out of your forced savings can turn your loose change into crisp bills you can grow in the long term.
Find ways to earn more
Since labor sectors suffered a great deal during the pandemic despite government measures to support workers, many of us saw significant drops in our income but more time on our hands. Those in low-wage jobs, for example, saw an 11.7% decrease in employment opportunities. Middle-wage employees didn't fare any better either, with a 5.4% drop.
For most companies trying to weather the COVID-19 storm, the alternative was to cut back on the employees' work hours and save on salaries. In turn, more employees found themselves with more time at home which they could use for other projects or side gigs.
Now that most of us are doing almost everything online, you can take a chance at a surplus of online jobs for extra income. However, the competition can be pretty challenging, with a 460% increase in people searching for work they can do remotely at home. Trends also anticipate a lasting interest in remote jobs even after the pandemic.
If you can join the eCommerce bandwagon, it's the best thing you can do to earn more from your spare time. Otherwise, investing in your skills so you can take freelance offers is not such a bad idea either. Pundits expect today's gig economy to grow to up to $455 billion by next year, and it's growing fast! Plus, the advantages in flexibility, less stressful environments, and pay opportunities are unparalleled.
However, do keep your day job unless you find the right niche, especially if your employer offers benefits like 401k plans or leave incentives. Being a freelancer these days is in, but you'll have to work your bottom off and be an absolute boss in developing the discipline to manage your finances and savings properly.
Be a pandemic winner
The current health crisis serves as a double-edged sword that can either turn you into a winner or a loser from a financial standpoint.
The simple fact is that wealthy neighborhoods are less financially affected by the pandemic than poor households that lost significant income and accumulated more debt to survive. However, this doesn't mean that you can't incur savings if you are part of the marginalized sector. Developing best practices is still your best bet to get yourself out of financial woes and come out on top during the pandemic.
For one, the federal government instituted the Families First Coronavirus Response Act of 2020, which aims to support over 40.6 million impoverished Americans economically affected by the pandemic. Aside from this, the government has also provided stimulus and relief checks to Americans earning less than a million a year under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Using the government's financial aid to reduce your debt or establish your own business makes life a bit easier for your family during these challenging times. It's not enough to rely on the government for long-term financial support, so it's always best to put your receiveables into something that will either lessen your money stress or increase your bottom line.
Consult debt relief services and figure out how to settle any arrears, while also allowing you to save up for rainy days. Learn more about available loan amnesties or lenient payment schemes from your lenders under the CARES Act.
Knowing all of your available financial options during the pandemic and developing the best money habits in these unprecedented times should set you up for the new year. The primary key is, as always, discipline and determination to see all your plans through.