Hairy Therapy

I am your typical New Yorker. I know how to hail a taxi without getting side-swiped. On escalators, I stand on the right and walk on the left. I let people get off the train before getting on. I give tourists succinct, exact directions – even offer restaurant recommendations – but don’t linger for small-talk.
However, as a New Yorker, I am an enigma. That’s because I do not have a therapist.

It seems that every friend, colleague, acquaintance or person behind me in line at the drugstore has at least one therapist and sees that person pretty regularly. I know that going to therapy is good for one’s mental health—especially during these anxiety-inducing pandemic times– and that therapy can help people learn to deal with anxiety, stress and depression.

However, as a woman of Middle Eastern descent, I prefer to spend my therapy money on more pressing matters – specifically on laser hair removal, electrolysis and waxing. No therapist will help me get over the memory of me as a little girl in the fourth grade, sitting in my reading circle surrounded by my classmates. Compared to the cute, skinny blond girls in their bobby socks and tennis skirts, I was a thick hairy rectangle that smelled like hummus, sporting tube socks up to my thighs to cover up my hairy legs. That’s a memory that is burned into my psyche and for that reason, I prefer to get rid of the evil that caused my anxiety, rather than sit and have a chat about it.

But therapy – or even self-reflection – is crucial in order to identify issues and move forward towards new goals and fulfillment.
In personal finance, it’s important to do a little self-reflecting. Especially now at the beginning of a new year, it’s helpful to examine our finances, be honest about our spending and saving habits, and set some new goals to change bad behavior.

Here are some tips for planning a more financially rewarding 2022…

1. Before setting impossible goals for 2022, be thoughtful and thorough. Review your tax paperwork and last year’s budget.
   • Take into account any adjustments you made to spending because of the pandemic: did your family spend more on groceries and the Wine Warehouse and less on eating out and clothes? Was your utility bill a bit higher because you were spending more time at home? Anticipate changes for this year and make adjustments accordingly.
   • Identify any unexpected expenses or surprise savings from last year and think ahead to the coming months.
2. Don’t have a 2022 budget yet? SET ONE UP NOW! Use Mint.com, YNAB, Personal Capital or another budgeting app to set up a budget, create an excel spreadsheet to track expenses, or just write it down old-school. Find a comfortable way to track your spending and then do it.
   • Budget and save up for a six-month emergency cushion, even if that means putting $50 a week into your savings account. Automate your savings so you don’t think about it.
   • As inflation continues to creep up (7% last month!), make sure to allow some breathing room for increasing costs in your budget. While inflation has impacted most items, from groceries to gas to rent to used cars, we expect inflation to decrease as the supply chain disruption subsides and the pandemic wanes.
3. Make a debt management plan. Add up your total annual expenses plus any additional debt and take a look at your overall income; what is the ratio of expenses to income? Were you able to manage debt and also save last year?
   • If you have debt, prioritize by paying off the highest interest rate debt first while continuing to meet minimum payments for lower interest rate debt.
   • Manage debt by consolidating into a low-interest rate credit card and make sure you are paying more than the monthly minimum if you can.
4. Grow your money. Once you have funded an emergency reserve account with 3-6 months of fixed costs, now is the time to invest.
   • Prioritize funding your retirement account, making sure to take advantage of any employer match. If you don’t have an employer plan, set up a Roth or Traditional IRA and fund up to the maximum contribution ($6000 for individuals under age 50/$7000 for individuals age 50+).
   • Consider investing in mutual funds or ETFs. These options allow you to leverage stocks and bonds in a diversified portfolio or product, and can be low-risk options that can help you increase your savings instead of lingering in a low-interest savings account. Investing your savings in the market can also provide better returns over the long-term which helps to dampen the impact of high inflation.
5. Set a personal financial goal for 2022 and take the steps to get there. Do you want to increase savings by 20%? Do you want to get rid of all credit card debt? Are you saving for a new home?
   • Taking control of your finances and prioritizing your goals can be empowering; the more you understand your spending and saving habits, the more confident you will be in making the right financial decisions for you and your family.

If this seems too overwhelming to tackle alone, and/or want an accountability partner, make sure to meet with your financial advisor to discuss your 2022 goals. Like a therapist, a financial advisor can help you identify bad habits, set priorities and help you reach your goals.