By Gary Foreman
This is the time of year when many people take stock of themselves and
their future. So alongside your plan for a trimmer waistline, we'd like to
suggest some financial resolutions for the new year.
Resolve to save at least $1 each day. It doesn't seem like much, but it
does add up faster than you might think. You've probably seen the numbers
before. Let's assume that you earned 10% per year on your savings. That's
the long term average for the stock market.
At the end of 10 years you'll have nearly $5,000. After 20 years you will
have accumulated over $20,900. If you start at age 30 and keep it up until
you're 65, your measly $1 a day will have grown to $99,000!
So how will you save $1 a day? How about bringing soda to work instead of
hitting the vending machines at break time? Or skip the 'supersize' at
lunch. If you can't think of something ask your friends or family for their
Maybe you'd rather do the whole week at one time. How about staying in for
lunch one day a week? Carpool twice a week with a neighbor? You get the
idea. Anything that'll help you save $1 a day or $365 a year will work.
Certainly there's somewhere in your expenses that can be squeezed that much.
Resolve that your credit card debt will not increase in any month this
year. A comic once said that the first key to getting out of a hole is to
quit digging. It may not be funny, but it is true.
To keep your card balances from increasing you'll need to pay off any new
charges you make each month and also pay any interest caused by your old
balance. For some people that will be tough. They see no connection between
using a credit card and paying it off. They think that paying the minimum
each month is a major victory. It isn't.
Keeping this resolution will require you to keep track of your credit card
spending and to stop spending when you run out of money.
Roughly one third of all credit card users carry a zero balance. While you
might not be able to achieve that goal this year (wouldn't it be nice if
you could!), you can manage to keep your financial hole from getting any
The next resolution will help you achieve the last one. Resolve to consider
alternatives before making any
purchase of $100 or more. Over the last 30 years the size of the average
home has grown by 50%. And, self storage locations are a fixture in most
towns. The reason for this is simple. We buy too much stuff and then have
to store it.
The concept is simple. Before making any major purchase wait a couple of
days. Use the time to think about ways you could get the benefit without
spending the money.
Do you really need a new fertilizer spreader? Couldn't you borrow one from
your next door neighbor? Rent one? Or even buy one used?
Often going to the store and pulling out the plastic is not the best way to
achieve your goal. But you'll never know unless you think about
Resolve to have a proper will and estate plan. No one likes to think about
their death. But, everyone should legally prepare for it. Even if you're
young, single and don't have any children. If the unexpected happens
someone will need to step in and make decisions about your funeral and take
care of closing out checking accounts, IRA's and selling your car and other
Everyone should have a will. And, many will want to have a 'living will' to
state their preference on being kept alive using life support equipment.
It's wise to also have a plan in place in case you're incapacitated.
These documents aren't as expensive as you might think. And, in most cases,
they'll work fine for many years. Take the time this year to put the proper
legal papers in place in case something happens. Your loved ones will
already be dealing with grief. Don't make them deal with legal
Finally, resolve to learn one new moneysaving tip each month this year and
put it into practice. There are literally thousands of ways to save money.
You really don't have to look very hard or very far to find good ideas.
It's simply a matter of making up your mind that saving money is important
to you and you're willing to put forth a little effort to accomplish your
Try one new moneysaving idea each month. You might just find that you end
the year in much better shape than you entered it. Isn't that what
resolutions are all about?
Gary Foreman is a former financial planner who currently edits
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