Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions.
But in this episode, we continue our series on financial dreams, with conversations with Nerds who have accomplished their financial dreams and interviews with outside guests about what they want to do with their money in 2022.
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Our take
To pin down your money goals for the year, think about your values, priorities and where you are in life. Realize that you may not be able to accomplish everything in one year.
If you’re trying to get a better grip on your spending habits, look into using the 50/30/20 budget. With this method, you direct half of your income to cover needs, like rent and food. Then 30% of your income goes to wants, like coffees in the morning or vacations. Lastly, 20% of your income goes to debt payments and savings.
If you want to become a homeowner in the new year, think about whether you’re in a good place to do so. If you don’t see yourself staying in a house for around five years, buying a house may not be worth the expense and hassle. Renting may not build equity, but it can buy you freedom.
Lastly, if you’re shopping for a new credit card in the new year, think about what types of perks you want. Once you’ve chosen the right card, work to get the sign-up bonuses. And after you’ve had your card for a while, take the time to evaluate whether it’s worth the annual fee, if it has one.
Our tips
- Find a system. Whether you use the 50/30/20 budget or another budgeting tool, make a plan for your spending, saving and debt payments.
- Renting buys you freedom. Buying a home often doesn’t make sense if you aren’t able to stay put for a few years.
- Know what you want from a credit card. Applying for a new card can earn you a big sign-up bonus, but make sure the ongoing benefits are worth the annual fee.
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