As we near the end of 2021, there are several things you can do to set yourself up for financial success in 2022. By taking a little care and planning ahead, you can make sure that 2022 not only gets off to a good start, but continues that way over time.
1. Change Your Thrift Savings Plan Contributions for 2022
Late December is the best time to adjust your Thrift Savings Plan contributions for 2022. Don't do this one until after Christmas, so that it takes effect in January. Whether you're just upping the percentage or trying to max out your contributions, avoid having uneven January paychecks and take advantage of the full year by making your changes during the last week of December, or at least before the new year and the new pay period starts.
Keep in mind that active-duty military should be receiving a pay increase in January. The legislation has not passed all the way through the process yet, but it is projected to be 2.7%. This is a great time to increase your TSP contribution without feeling a decrease in your paycheck. I recommend folks increase their TSP contribution with every annual pay increase, time-in-service increase and promotion. It's an easy way to grow your contributions painlessly.
If you're reaching the maximum contribution, you'll need to do a little math. In 2022, the maximum allowed TSP contribution will be $20,500, or $27,000 if you're age 50 or over. Don't forget that you want to spread your contributions out over the year if you're in the Blended Retirement System, so that you get the government matching funds on all your contributions.
See: Thrift Saving Plan Contribution Limits Going Up In 2022
2. Set Your 2022 Financial Goals
The easiest way to reach a goal is to identify it, and think about why it is important to you. Whether you want to pay off debt, build savings or make a special purchase, write down your goal. Better yet, post it somewhere you'll see it regularly.
3. Build Your 2022 Spending Plan
While it isn't finalized, it looks likely that the military pay raise will be 2.7% for 2022. How will this extra money fit in your spending plan? Using the goals that you've identified, build your spending plan. It is a lot easier to stay on track when you have pre-planned where every dollar needs to go. Be sure to budget a little fun money so that it doesn't feel like all work and no play!
4. Review Your Expenses
Now that you have your 2022 spending plan, look for areas where you could possibly save money. Perhaps you can get a better deal with a different cell phone provider, or negotiate a better rate for your internet service, or start shopping at a discount grocery store for some items.
Take time this week to try to reduce just one regular bill. This can be really powerful because it is just one action that will save you money every single month.
Taking these simple steps will help make 2022 your best financial year yet!
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