Although we’re well into the New Year, it’s not too late to make and implement 5 essential money-related “resolutions” to achieve a better financial future. Here are those resolutions and some suggestions on how to implement them:
1. Structure your investments to increase your returns. Action items include the following:
- Achieve the best allocation formula (proper percentage of stocks vs. bonds) for your particular situation. (Check out our optimal allocation tool.)
- Maximize your retirement account contributions with your 401k, 403b, and/or IRAs. (Check out our retirement accounts allocations.)
- Spend more time reviewing your investments to learn better ways to improve them going forward.
2. Cut expenses:
- Investment Expenses – There are often expensive “hidden” costs that can rob you of future gains. Look to find and use less costly financial advice resources, such as reasonably-priced financial advisors, discount brokers, index mutual funds, and low-cost Exchange-Traded Funds (ETFs). If your overall investment expenses exceed 0.5% (1/2 percent) of your assets, you are overpaying.
- Insurance Costs – Seek lower-cost alternatives for insuring your car, home, and recreational vehicles (boats, RV’s, etc.).
- Look for other major expenses that you can cut to help you achieve your financial goals (examples: eating out, telephone costs, energy bills).
3. Pay off more (or all) credit card debt:
- Increase your monthly payment.
- Switch to credit cards with lower interest rates.
- Don’t use your credit cards as a supplement for a shortage of income. (The best approach is to pay off all of your credit card debt each month!)
4. Seek out ways to increase your income:
- Look for a better paying and more satisfying job or career.
- Take on part-time work or business that you can enjoy and use to transition to a full-time career.
- Invest in higher yielding investments with appropriate risks to you and your situation. (Check out our optimal allocation tool.)
5. Create a sound, workable cash flow budget and resolve to live within it. The budget should include these elements:
- Allows you to live within your means
- Provides opportunities for you to enjoy the activities that are most important and enjoyable to you
- Meets all of your short-term and long-term financial goals (for example, vacations, kids’ college, your retirement)
To get started, select the suggestions most appropriate to you and get going. Just do it! You’ll be much happier when next year comes along!