5 Steps To Better Finances In 2022 And Beyond

Do you want to have better finances and make game-changing moves in 2022 and beyond?

You’ve taken a great first step towards that initiative.

Get ready for the 5 steps you can take to change your finances and make the new (or current) year your most improved financial one yet!

better finances

5 Steps To Better Finances In 2022 And Beyond

Step #1. Account For All Income & Expenses.

Accounting for your money is SO important if you want better finances.

The objective is to find out if your household is operating at a profit (+) or loss (-).

This activity accounts for ALL the money that hits your bank account and ALL the money that leaves your bank account.

In order to do that, you have to do the math.




 NET INCOME (income higher than expenses)

 NET LOSS (income less than expenses)

As you can see, the math isn’t the difficult part.

It’s figuring out what you should/shouldn’t include in your calculation.

Let’s break it down and work out an example for a month.


Let’s say you make $4,000/month before taxes.

You don’t want to include that amount.

Instead, use the amount that hits your bank account – your take-home pay.

After taxes it might be around $3,500, for simplicity sake.

If you have any other after-tax income to include, you would add it to the $3,500.

Income Total: $3,500


Expense categories will vary. If you’re new to recording expenses, you may need to keep your statements handy to refer back to them.

Here’s an example of how your expenses could look:

  • Mortgage/Rent…$1,000
  • Utilities…$200
  • Cable/Internet…$75
  • Cell Phone…$100
  • Groceries…$750
  • Restaurants…$100
  • Car gas…$50
  • Subscriptions…$100
  • Debt payments…$200

Expenses Total: $2,575

Net Income (Loss): $925 Profit ($3,500 income – $2,575 expenses) 


Determining net income/loss is the very first step to accounting for your money.

Net income/loss is not the same as budgeting.

They work hand-in-hand.

You’re able to control your net income/loss if you budget your money.

Budgeting is a method of controlling expenses, where money is set aside for a particular purpose. 

Look at budgeting as a “plan” of how to spend your money.

It sounds strict, but it doesn’t have to be. There are flexible budgeting methods – it’s really what works for you.

Next up, Step #2 is a great first step to budgeting and managing your money because you’re having to make those often difficult decisions. 

Step #2. Review And Trim Expenses.

If you ran through the exercise in Step #1, you may or may not be surprised by your net income/loss amount.

For this next step, you really want to go through each expense line item with a fine-tooth comb.

The easiest way to save more money is to review where your money currently goes.

Let’s pull up the previous expense listing and make some edits. Check out the dollar amount changes and added notes:

  • Mortgage/Rent…$1,000
  • Utilities…$200
  • Cable/Internet…$75  $60 – Changed to lower speed and saved $15/month
  • Cell Phone…$100
  • Groceries…$750  $500 – Cut back to $125/week x 4
  • Restaurants…$100
  • Car gas…$50
  • Subscriptions…$100  $80 – Cancelled one subscription that wasn’t used
  • Debt payments…$200  $400Increased this balance to pay off faster

New Expenses Total: $2,490 

Savings of $85 for the month ($2,575 old expenses – $2,490 new expenses) and increased debt payment of $200!

Making these types of decisions will help change your financial trajectory and better your finances. 

Step #3. Make Plans For Extra Money.

If you have extra money from cutting expenses or from increasing cash flow, it’s smart to look into ways to deploy that money. 

Below, I’ll provide four options that you can consider to funnel your extra money.

→ Option 1: Pay down debt.

Remember from Step #2 when I increased the debt payments to $400?

When debt payments are increased, the loan is paid off quicker.

Eventually, that $400 will be an additional savings to you each and every month!

Let’s go through and see how a debt payoff plan can work for you.

 List out all your debt(s).

 Focus your attention first on credit cards, auto loans, student loans, personal loans.

The next part will vary, but you can:

  • Payoff the smallest balance first and move onto the next. I’m a fan of this method since you can build momentum!
  • Make increased payments each month to pay each loan off faster. Just like the example from Step #2.
  • Use an alternative payment plan that cuts down on interest. An example – if you have a credit card, you can opt to transfer balances to a low interest or 0% credit card to pay off the remainder of the balance.

→ Option 2: Build an emergency fund.

Have an emergency-only fund that will help you in the times you need it.

It varies for everyone. For myself, it’s $5k-$10k. This is because my household currently has two incomes. To be transparent, my household tries to live off one income, so having two incomes makes it easier to account for an emergency.

For you, it might be $1k-$3k or even $15k-$20k.

The best way to manage emergency funds is to keep it in a liquid account. I recommend AllyBank. In the past, they have raised their high-yield interest rates 10 times in a single year!

Examples of emergencies can include job loss/layoff, health concerns, car trouble, and anything else that’s critical.

 Option 3: Save for life purchases.

If a purchase is on the horizon, then it’s the perfect time to save. It could be a new device, down payment, wedding – whatever it is, start funneling money away!

 Option 4: Invest for the future.

The best way to grow your money for the long-run is to invest. There are different ways to invest in your financial future.

Here are the most common types:

  • Stocks
  • Bonds
  • Real estate
  • Business

More investment tips for beginners: Investing: Why To Grow Your Money Beyond Savings

Step #4. Set Financial Goals.

Setting financial goals is critical if you want to GROW financially. 

In this step, embrace what could be possible in your future.

Question your current situation. Set goals that will get you there – $1 at a time, 1 day at a time!

• Where do you want to be money-wise in 5, 10, 15, 20 years?

• Do you want to retire in your 30’s, 40’s, 50’s, 60’s?

• How much money do you need to become financially free?

• Could you earn more money or spend less to save/invest more?

It wasn’t until I started asking myself these types of questions that I realized that my husband and I could become financially free in our 30’s.

6 years ago, had I gone with the status quo, I would be nowhere near realizing the goal of financial freedom.

Make those goals, big or small!

Step #5. Add Insurance To Protect Your Assets.

Add preventative measures with a line of defense for your finances and livelihood.

The main goal here is to help prevent a catastrophic hit to your finances.

Think insurance – Health, Umbrella, Home, Car, Identity.

Let’s discuss a few of these:

Health insurance is simply a must. With overnight hospital stays averaging $10k/night, it can easily wipe out a portion of your financial resources.

As your net worth grows, umbrella insurance becomes necessary. It’s extra liability insurance above what home, rental, and car insurance will cover.

In this day and age, identity theft insurance gives you extra security. It’s designed to cover the costs of recovering your identity and also includes services to alert you of potential issues.

Bonus Tip: Find A Money Mentor.

Find a money mentor that is willing to impart wisdom.

If you’re overwhelmed, start slow – reach out to someone you can trust to talk it over.

It may be a friend, neighbor, or fellow church-goer. You can always frame it like “you’re asking for friend”.

As an added bonus, this ally can help hold you accountable for your spending and overall money management.

You don’t have to go at it alone, everyone has to deal with this process, it just varies to what extent.

My website, Full-Time Dollars was established to help others with their finances. You can always come by and read my new and updated content and reach out if you have questions!

Bottom Line

It’s always a good time to start making progress and striving for better finances.

It may not come naturally for most folks, but with anything, practice will help you get enough of an understanding to make the decisions that matter.

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