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Budgeting & saving

Long-term financial planning: 4 ideas for 2022

Young family with toddler on lap, eating breakfast
Photo of a young family is showing their hectic lifestyle - busy morning they are spending together over dinning table, using computer and mobile phone while their toddler boy is with them
AleksandarNakic/Getty Images

The start of a fresh year is all about new beginnings. Whether you're looking to get healthy, heal a relationship, or go after your career goals, the new year is a great time to get started. You might also have a few resolutions in mind when it comes to your money—some changes that will get your financial vision more in line with the things you value, like a secure future for you and your family. Acting on a few key long-term financial planning goals can help achieve what you've got your sights set on.

While you probably won't feel the effects of these resolutions as immediately as, say, working out every day, being mindful of your debt payments and saving practices over the long term helps you become healthy in its own way. Small, incremental additions here and there now can yield big results that you'll thank yourself for later.

Here are four long-term financial planning tips for you to consider implementing this year:

1. Contribute consistently to your retirement fund

In 2021, Bankrate surveyed over 2,000 Americans about their retirement savings and found that  more than half are "behind on retirement savings."  If you haven't been able to prioritize your retirement savings in the past, it's important to start as soon as you're able. Even if you feel behind, you can still take steps toward the retirement you envision.

To help ensure you're  preparing for retirement properly, take a look at your accounts in the new year to get an idea of where things stand and how you can make changes to build your funds. No matter what your retirement picture looks like today, think of it as a work in progress where tweaking and adjusting certain objectives now will help boost its quality later.

Make 2022 the year you commit to regular contributions to your retirement fund. With the way compound interest works, even a small increase in your monthly contributions can lead to thousands of dollars more in your account when you need it down the line. And if it's an option, make sure to take advantage of any employer match your company provides—it's essentially free money in your pocket to use later.

2. Pay down your mortgage and other debts

Home researching company Zillow notes that the average family spends about 18% of their income on their mortgage payment each month. (This figure is an estimate as it depends on where you live and your income; it can double in high-cost metro areas.) Just imagine how else you could use those resources if you no longer had that debt.

Consider pushing an extra $100 or $200 or whatever you can afford toward your principal balance each month. It's a practice that can end up cutting several years off the length of your loan or saving you thousands of dollars in interest. Some lenders charge for paying back your mortgage early. Check with your mortgage provider to review your contract terms on any prepayment penalties.

Alternatively, you could take this resolution in a different direction and think about using debt more wisely. Mortgage, credit cards, student loans—you might not be able to pay everything off in 2022, but knowing where your debt payments are most valuable can help you strategically save and build a strong financial profile. Talking with a financial advisor can help you formulate clear, personalized goals and the best ways to be more wise about your debt.

3. Build an emergency fund

If we've learned anything from the past couple of years, it's that we don't know what tomorrow holds. Pandemics, natural disasters and job losses don't announce themselves in advance. That's why we all need an emergency fund or a reserve of cash to help us with any unplanned expenses or financial emergencies.

Most experts will tell you to save between three to six months of income in this fund. To make sure it's there when you need it, make this important resource a line item of your 2022 budget. Contribute to your emergency fund monthly—just like your utilities and cellphone bill—via automatic transfers, if your bank allows.

4. Save for your child's or grandchild's education

The price of college keeps going up. According to the Education Data Initiative, the average cost of a college education is $35,720 per student per year. Most parents aren't ready for those costs, especially since many of them are in the "sandwich generation," responsible for tending to the needs of their aging parents as well as their growing children.

No matter how old your children (or grandchildren) are, consider saving for their college expenses now. Look into 529 educational savings plans, popular investment accounts designed specifically for qualified educational expenses of the account's beneficiary (a child or future student).

Once you've selected a plan, set up regular contributions that fit your budget, and challenge yourself to save a semester's worth of tuition in 2022.

Mindful choices help future you

We often put aside long-term financial goals like saving for retirement or building an emergency fund to allow room for more immediate needs in our budgets—even though we crave the feeling of security that kind of planning can provide us and our loved ones. We tell ourselves we have plenty of time to save, that retirement is ages away, or that we need that extra $100 for other expenses.

But here's a secret about long-term financial planning: Pay attention to these goals today, thoughtfully choosing to put your money toward what you truly value in life, and you'll be able to stay on track with your goals and feel confident about the financial path to your future.

If you're ready to get started setting your financial new year's resolutions, you may want to talk with a Thrivent financial advisor for guidance. Use our locator to find someone near you.

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