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Category:  Money

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Financial Resolutions

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  ideas.

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  deeper.

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  alternatives first.

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  possessions.

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  complexities, too.

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  goal.

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 The Dollar  Stretcher.com website and newsletters. You'll find hundreds of articles to  stretch your day and your dollar. Visit today!  



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Category:  Money

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