The new year is only a few days away and some people are wondering how they should manage their finances in 2022.
A personal finance professional who uses the username BreakYourBudget on TikTok, analyzed how you should organize your money in 2022.
When you get paid, 5% or a little more goes into a retirement account, while the rest goes to a checking account, TikToker said in a 39-second video clip.
She then splits the checking account into three different expense branches.
This first branch covers essentials, rent, utilities, insurance and groceries, which in a “perfect world” would cover 50% of your income, according to TikToker.
Next, “ideal” goals should be 30% of your income. Goals include saving, paying off debt, and investing.
The last category is lifestyle, which includes all other extra costs like shopping, going out, and other pleasures.
“If you are focused on your goals, this should be 15-20% of your income,” says the personal finance expert.
But most importantly, TikToker warned in the text at the end of the video that this is just a guide.
You can adjust your allocation based on your current financial situation and your own personal goals.
When it comes to retirement savings, you can save money using 401k, is an employer-sponsored retirement plan.
Another way to save for retirement is through a individual retirement account (IRA).
Big the difference between the two typically 401k employer matching offers, while an IRA account allows you to choose between more investment options.
The average American thinks they will need about 2 million dollars in savings to retire comfortably, according to a study by financial services firm Charles Schwab.
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https://www.the-sun.com/money/4366501/organize-finances-2022-retirement-savings/ Money expert reveals best ways to get financially organized for 2022