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Home / Lifestyle / Keeping your new year’s financial resolutions

Keeping your new year’s financial resolutions

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Practical money matters by Nathaniel Sillin

Whether you’re talking about diet, exercise or money, keeping new year’s resolutions is challenging. A University Of Scranton researcher has noted that weight loss is the current most popular resolution, followed by finances improvement at No 2.
And, while the study showed that roughly 40 to 46 per cent of people making resolutions are successful in their specific goal at the six-month mark, more than half give up.
Your personal finances need more dedication than that. Fortunately, you can add some fairly easy money resolutions that can help your finances overall.
Make your first budget or do a better job of reviewing the one you already have. A 2013 Gallup survey reported that only one third of Americans actually prepare a detailed household budget. Make your first resolution creating or reviewing your household budget so you know where your finances stand at all times.
Budgeting involves day-to-day tracking of finances but having a quick way to determine your net worth – your assets minus your liabilities – offers the biggest picture of how you’re doing and what next steps you might take to improve your circumstances. Make this calculation your kickoff to each new year.
Having an emergency fund means you’re always ready for the unexpected. The average emergency fund generally covers three to six months of daily expenses – yours could be more or less. Keep in mind that the primary purpose of an emergency fund is to keep you away from savings when unexpected expenses come along.
Depending on your comfort level with all things digital, virtually every aspect of your financial life can be managed online or with computer-based software. From setting up a basic paper or online calendar to tracking pay dates, bills’ due dates and deposit dates for savings and investments, a daily series of reminders and action items will keep your money issues on time and on track.
Recommit to your retirement. If you’re employed or self-employed, here’s a way to make a retirement savings resolution stick. First, make sure you’re signed up for a 401k, 403b or 457 plan at work or a corresponding SEP-IRA, self-directed 401k or other self-employment retirement plan that fits your tax and financial situation.
Then check at the IRS website what your 2016 maximum contribution is for your respective plan.
Finally, either through budgeting or a plan to bring in more income, determine how you can come as close to your maximum contribution as possible for the coming year. And, of course, don’t forget about traditional or Roth IRAs that you can contribute to independently of work-based plans. All of these options can improve your retirement prospects while saving you considerable money on taxes.
Review your non-retirement benefits and insurance. For most employed and self-employed people, open enrollment for health and other company benefits wrapped up before the year end. But that doesn’t mean you can’t make notes at any point in the year for possible changes and improvements to your health insurance and related tax-advantaged accounts.
The same goes for reviewing your personal home, auto, life and disability insurance for potential savings or better coverage, or both. Qualified advisers can help you review these choices.
Find more money to save. Whether it’s adjusting what you spend, paying off expenses or finding ways to bring in more income, saving more is one of the best financial objectives there is.
The first step is to track and set spending limits that will help you reset or eliminate any expenses standing in the way of your goals.
Bottom line: Making new year’s resolutions always sounds like a good idea at the time but keeping them requires determination, study and focus. This year, build the kind of money habits that position you for success.
Nathaniel Sillin directs Visa’s Practical Money Skills For Life financial education programs. Follow him on Twitter at twitter.com/PracticalMoney. His articles are intended to provide general information and should not be considered legal, tax or financial advice. Always consult a tax or financial adviser for information on how the law applies to your individual financial circumstances.

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