5 facts about banking in 2022

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    2022. New year. New you. New look at banking? It would be a smart move.

    Now is a good time to review your banking habits and see what you can do to meet your financial goals. Here are five facts about banking in 2022 and steps you can take to improve your finances in the new year.

    1. Your emergency fund remains a top priority

    With the COVID-19 pandemic, you may have read more in the past two years than ever before about the importance of saving money on emergencies.

    It’s still important for 2022.

    You want enough savings to cover unexpected financial setbacks – ideally enough to cover at least three months’ worth of expenses – in an easily accessible savings account, says Caroline Wetzel, vice president of Procyon Partners, a wealth consulting firm in Shelton, Connecticut.

    Sufficient savings can not only be helpful in financial emergencies. «The pandemic has led many people to reformulate and redesign their expectations of life,» says Wetzel. «If you’re thinking about joining ‘The Great Resignation,’ you may need to top up your emergency reserves even further, in the form of six months of cash instead of three,» she says.

    Do you: Set up an automated savings transfer from check to savings to build up your bank balance. Make sure your money is working hard for you and bringing in as much interest as possible. You can often find the best savings rates at Online savings accounts with high interest rates.

    When your emergency savings account is fully cashed to cover three to six months of expenses, consider investing additional money in investments that have the potential to grow Outperform inflation.

    2. Adjusting your budget can help reduce the burden of inflation

    Inflation rose slightly in the second half of 2021, so be sure to watch out for it in 2022. You may not be able to control inflation, but adjusting your budget can help reduce the burden of higher prices and avoid the loss of savings.

    Do you: “This is a good time to take stock of where you have spent money in the past year,” says Wetzel. (Online bank and credit card statements are a good place to check.) Review your expenses and prioritize the top things, which can include groceries, housing costs, and building your emergency fund. Then see if lower priority spending can be cut for the new year, she says.

    When some of your must-haves rise in price over the course of the year, you know you can still afford the essentials. Use extra funds to create (or update) a solid savings plan.

    3. It can be easier to avoid overdraft fees

    You may have more options to avoid overdrafts in 2022. At least one major bank has announced that it will end overdraft fees in early 2022, and the Consumer Financial Protection Bureau recently reported that it will «step up its regulatory and enforcement scrutiny of banks that are heavily dependent on overdraft fees.» The office could face heavy penalties for impose illegal overdraft practices.

    Do you: If you have been affected by overdraft fees in the past, consider moving to an institution that makes it easy for you to avoid these fees.

    4. Another institution could be a better fit

    Since the beginning of the pandemic, many people have overestimated what is important to them, says Wetzel. For some, this could mean deciding whether the banks they do business with are up to par.

    According to a recent NerdWallet survey, 78% of bank customers say having an ethically or socially responsible primary bank is very or fairly important. The survey of more than 2,000 US adults was commissioned by NerdWallet and conducted online by The Harris Poll.

    This finding suggests that ethical or social issues such as racial justice, environmental pollution and community impact are important for consumers in choosing who to do business with.

    5. Your child may be using a new banking app

    Banks and financial institutions have launched banking apps specifically for kids and teens, and if your kid hasn’t signed up already, those apps are worth checking out in 2022, CEO of Kendall Capital, a Rockville, Maryland wealth management firm. «Giving children a budget and making them responsible for certain purchases – such as their own clothes or shoes – will help them better prepare themselves to manage their own money in the future,» he says.

    Do you: Let your child a. download Child-oriented banking app to learn more about spending and saving. Parents can use many apps to send money electronically and help children set savings goals. Watching their own bank balances grow as kids can help them decide whether to spend on a trendy purchase, Kendall says.

    The new year offers the chance to move forward and become financially fit. In 2022, that could mean creating and investing budgets to fight inflation or find a new banking house, be it for a better savings rate, lower overdraft fees, or a more personal focus on your values.

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