Money expert: Here are 5 steps to achieve financial health in 2022

·3 min read

Want to get on better financial footing in 2022? Just follow five simple steps, according to one money expert.

Personal financial expert Jean Chatzky recently spoke with Yahoo Finance Live (video above) on how you can improve your finances this year.

Step 1: Embrace your current financial situation

That starts with asking three main questions about your finances.

“What’s coming in? What’s going out? And where is it going?” Chatzky said. Knowing your financial situations will help you move forward.

Step 2: Don't compare your money goal with others

You should have your own individual goals when trying to save more money and tune out peer pressure from friends and social media to overspend. 

“If you can shut the rest of the world out, whether that is shutting out your colleagues and your friends, or whether that is shutting out social media because it’s telling you to buy certain things or to wear certain things, you’re going to be much more successful in getting to what your ultimate goals actually are,” Chatzky said.

A person wearing 2022 glasses looks on ahead of New Year's Eve celebrations at Times Square as the Omicron variant continues to spread in the Manhattan borough of New York City, U.S., December 31, 2021. REUTERS/Stefan Jeremiah
A person wearing 2022 glasses looks on ahead of New Year's Eve celebrations at Times Square as the Omicron variant continues to spread in the Manhattan borough of New York City, U.S., December 31, 2021. REUTERS/Stefan Jeremiah

Step 3: Set small, manageable goals to save

Breaking up financial resolutions into achievable bites can make those bigger goals easier to reach.  

“When it comes to saving, it’s great to say, ‘I want to save $5,000 a year,"" Chatzky said. But "it’s a lot easier to say, ‘I want to save $100 a week."

Step 4: Automate savings

This will help you pay yourself first and prevent you from overspending your money. 

“Human beings are creatures of impulse. We see something, we want it, we buy it,” Chatzky said. “If you’re putting money into a health savings account, or an IRA, or a 529, or a plain vanilla savings account, automate those contributions so that they just happen every single time you get paid."

Step 5: Ask for the money you want in your career

A record 4.5 million Americans quit their jobs in November, and Chatzky said that’s a sign workers are getting better paychecks

“A lot of them are not leaving the workforce for good. They’re going out in search of higher-paying opportunities,” Chatzky said. “Switching jobs is probably the best way to get a substantial raise in your salary."

Otherwise, request a raise. When asking for more money from your boss, take "the pulse of the current work environment,” Chatzky said, by learning how much a new hire would make in your current position and compare your salary to that of coworkers to discover your value as an employee. Then bring evidence of your contributions to your boss when asking for a raise. 

“It’s not about you wanting a raise or needing a raise," Chatzky said. "This is about what you have done for the company that you can bring forward to that manager."

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Ella is the personal finance reporter for Yahoo Finance. Follow her on Twitter @bookgirlchicago.

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