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After
a Turbulent 2008, New Year's Resolutions for a Financially
Healthy 2009
As
published in the Beaver County Times, Jan. 5, 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 No. 1 worry, but if it's yours, why not
consider the following New Year's resolutions to improve
your financial life? Resolve to:
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 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 was authored in cooperation with Financial
Planning Association.
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