6 Places Your Income Should Go in 2022
Today, thousands of people worldwide are at work making investments in hopes of making a decent salary. Many are worried about where they will be financially in five years. This can be tough because things might not go as planned, and it's hard to predict where the job market is going.
That's one reason why most people don't think about six places their money goes, and if you want to know where you should be putting your money in 2022, then keep reading.
1. Retirement Fund
Start early. To maintain a consistent rate of return, it is essential to start investing early on in your career. "The earlier you start saving, the greater the benefit will be," says Alex Keller, president of Blue Ocean Global Wealth. "You have time on your side."
Start saving between 5–15% of your income in a 401k plan or an IRA account. If you aren't contributing enough to your retirement accounts, try zooming out your current budget plan and consider increasing the amount you're putting away each month.
2. Needs
Food, housing, transportation, health care, utilities. These are the necessities of life and typically account for 50% of your income. They're also the most important places your money should be in 10 years.
Not only will they enable you to have access to all the food, shelter, and healthcare you need indefinitely, but they are also ways to invest the most important asset you will ever have: yourself.
3. Emergency Fund
Building an emergency fund is crucial when you first start saving money, especially in 2022.
The reason for this is that it can help protect your income from any emergency expenses that may arise during the time you're building up your savings, such as job loss or any other unexpected events.
Try saving $100 a week towards your emergency fund to start things off. Otherwise, start with an amount you can afford (say $50 a week) and then build up their fund with time. Work on saving three to six months' worth of expenses in your emergency fund. This will help protect you from most short-term financial problems.
4. Debt Payoff
Many people think they'll have more money to save or invest if they're debt-free. This is true! When you're struggling under the weight of your student loans or credit card bills, it can be challenging to find extra money for savings or investments.
With that being said, here are two debt payoff methods you can get started with:
- Snowball method. Tackle debts with the least balance no matter the interest rate.
- Avalanche Method. Pay off debts with the highest interest rates, then work towards lower-interest-rate debts.
Once those debts are paid off, you'll have more disposable income available for saving and investing (a huge relief there).
5. Investments
If you're in your early 20s, you have an advantage — time. You can take on some risk now, knowing that you still have time to recover if you lose. Here's what I'd recommend investing in over the long term:
Stocks
If you're of a certain age, you've probably heard horror stories about the Great Recession and its aftermath. But those stories are fading fast. Thanks to a solid economy and market enthusiasm, stocks are poised for good gains in 2016 and beyond.
However, please do your due diligence before you dive into the stock market and understand the risks of investing in the first place. When diving into stocks, a general rule of thumb is to invest money you are willing to lose.
If you don't know where to start, I'd recommend watching Nate O'Brian's Youtube video on "Stock Market For Beginners." and trying out stock market simulators on a smartphone app called "Trading Game" (aka the one with a cartooned Donald Trump).
Forex
This is short for foreign exchange currency trading. It's a way of making money through global currency fluctuations — and it's particularly profitable when the dollar is weak against other currencies.
Don't jump in unless you're willing to lose every penny you invest — there's a reason it's called "playing with fire" — but if volatility makes your heart race, this is an exciting option.
Real estate
This is another way to play the real estate boom without actually having to own property yourself (which is risky because of tenant issues). Real estate investment trusts allow investors to buy properties without dealing with tenants or maintenance problems.
Having $100k saved and ready is the best way to go. Though the property itself isn't going to be as much as $100,000, think of anticipating unexpected breakdowns such as a broken dryer machine. If you don't have the funds to cover those expenses, that might cause financial issues both in the short and long run.
These are just a few examples of how you can get your money to get to work instead of just sitting there in your bank account. Other investments such as Cryptocurrencies, NFTs, or becoming an Angel Investor for startups is also a great way to tap into the realm of investing.
As always, do your due diligence before making any major decisions, especially when you're new to this whole thing.
6. Wants
Lastly, we have wants, and that's perfectly okay (as it should be)! While we all want to think and grow wealth like Napolean Hill, it's just as equally important to treat yourself once in a while.
I currently allocate 25% of my income towards my wants, mainly towards clothing to look good, service subscriptions such as Spotify or streaming services such as Disney+ to unwind for a bit, and sports activities such as a gym membership to keep me healthy.
But hey, everyone's different. Whatever you choose to spend it on, may it be to go on a road trip with friends or taking your partner on that long-awaited date at the Italian restaurant you've been eyeing since the start of the month, ensure you spend it on the people and things that are great for investing in yourself.
Where your income should go in 2022
It seems like everyone has their ideas about where their money should go in 2022. Well, now you can control it yourself.
Wherever you decide, remember to make room for the things that matter — things that help you be a better parent, grandparent, or friend who does random nice things for people every day.
By paying attention to the places your money is going and making adjustments where necessary, you may find that your life becomes more enjoyable than ever before.
Special thanks to Nate O’Brien for inspiring me to write on his more extensive video explanation, which I highly recommend checking out!
