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After a Turbulent 2008, Make New Year's
Resolutions for a Financially Healthy 2009
Money worries are the most common cause of holiday stress,
according to Mental Health America. The 2006 study showed that
parents are more stressed than all other demographic groups by
finances and females are more likely than men to feel stressed
by finances.
Money isn't everyone's number one worry, but if it's yours,
why not consider the following New Year's resolutions to improve
your financial life?
Resolve:
1. To write down your goals. Have you ever written
down the big things you want in life? Granted, all great dreams
don't cost money, but many of them do. Money buys freedom to
travel, to retire early, to start a business, to change careers.
Putting goals in writing gives them a formality and a starting
point for the planning you must do.
2. To evaluate your risk tolerance. One of the most
beneficial things financial planners do is help you articulate
your financial goals and establish (or re-establish) your
tolerance for risk. With the market turbulence that's marked
2008, many individuals would benefit from an analysis of how
much risk they want or need to take given what they want
to achieve with their money.
3. To track your spending. If you haven't purchased
financial accounting software or set up a reliable accounting
method of your own, this is the year to do it. Diligent expense
tracking is the first critical step to getting personal finances
in order.
4. To consider advice on taxes and planning. Maybe
you've always winged it with your taxes and considered your
company 401(k) the ticket to your financial future. Chances are
your planning is inadequate. Start getting references on good
tax professionals and consider sitting down with a CERTIFIED
FINANCIAL PLANNER professional to discuss your current
retirement savings picture and what you can do to improve it.
5. To cut your credit card debt. If you can't ever
seem to get yourself completely out of credit card debt, make
this the year to do it. Take inventory of your balances, figure
out if you can consolidate them under your lowest-rate card, and
resolve to pay off an amount that exceeds the minimum on
time, every month. Oh, and pay cash from now on.
6. To save. If you haven't signed up for your
employer's 401(k) plan or begun a savings plan tailored for the
self-employed, this is the year. And resolve to save at least
5-10 percent of your take-home pay based on your cash flow, and
place the maximum in whatever retirement savings plans you
qualify for.
7. Get ahead on your mortgage. This advice isn't for
everybody, but if you've paid off your credit cards by paying
more than the minimum, you can apply the same principle to your
mortgage payment. Every dollar you prepay will potentially save
thousands in interest over the life of the loan if you plan to
stay in your home long-term. In fact, if you make one extra
payment a year, either at once or in equal monthly shares over
the course of a year, you can cut at least five years of
payments on a 30-year loan. Just don't short your retirement
investment plans to accomplish this.
8. Invest in yourself. If going back to college or
taking specific coursework will help you advance in your career,
plan to do it. If investing in a health club membership that you
actually use makes sense for your health as well as your
insurance costs, do it.
9. To redefine the way you shop. If you're an impulse
shopper, break the habit in '09. As a suggestion, get a legal
pad and make that your centralized shopping list use a
single page for groceries, stock-up goods (it's wise to start
buying essentials in bulk if you can measure the savings),
essential clothing or big expenditures you'll need to make at
specific times. Taking that pad with you wherever you spend
money is a good way to keep a grip on your wallet as long as you
don't stray from the list.
10. To attack that miscellaneous column. Do you really
need deluxe cable? How much are you paying for your Internet
service? Can you wear a sweater around the house and lower the
thermostat? In every budget, there are items that can be cut
or at least trimmed. Take a hard look at all your
"essentials" to see how essential they really are. Aim
for a target of at least 10 percent and start setting that money
aside on a regular basis.
December 2008 This column is produced by the Financial
Planning Association, the membership organization for the
financial planning community, and is provided by Don McCarty of
Financial Decision Partners, a local member of the FPA.
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