2014 is just around the corner and New Year’s resolutions are next. Though many resolutions are in the dustbin by the end of the month, people seem to have more luck with keeping financial resolutions. According to a survey by Fidelity, nearly half of those making New Year’s financial resolutions keep them, mostly. The actual number is that 46 percent of those who make financial resolutions keep 80 percent of the resolution. Not bad when you compare it to the number of weight loss resolutions that we don’t keep.
Of those who answered the survey, 52 percent resolved to save more, 19 percent to spend less and 19 percent to pay old debt. These are all great ways to enter into the new year in the black. In that vein, I’d like to offer five New Year’s resolutions to help you have a more financially fit 2014.
Set a spending budget. Many of us have no idea where we are spending our money. There must be gremlins that are emptying my checking account. The first step is to track your expenses to see where your money is going. Then make sure that you are really spending your money on the important things. Don’t even think of it as a budget — more like a spending plan. Plan where your money goes and make sure you stick to the plan
Reduce your bills. Take a good look at where your money is going. Are there ways to reduce your bills? Do you use all the cable television features you are paying for? Are you paying for a gym membership (or movie subscription) that you aren’t using? If so, cancel it. The less you spend on bills, the more is available for other things.
Ditch the credit card debt. As we are coming off the holidays and are shocked by what we managed to charge in the holiday season, this is the time to get your debt under control. The average American carries almost $8,000 in credit card debt. That much debt will cost you nearly $1,000 in interest this year. So set up a plan to get rid of that debt. If you owe $8,000 that would be $670 a month to pay it off. That is a hefty payment, but if you can manage to get rid of the debt, next year you can save that $1,000. Since you are accustomed to coming up with $670 a month to reduce the debt, just keep on saving it and add it to your savings account.
Start an emergency fund. Emergencies happen — the car breaks down, the plumbing leaks or you have an unplanned trip to the emergency room. All these unexpected expenses can throw the budget out of whack if you don’t have any money saved. The average cost of unexpected expenses annually is about $2,000 per household, according to the Consumer Federation of America. Make sure that you have that much money in an emergency fund to keep you from having to put more expenses on the credit card.
Set a saving budget. Once you have the emergency fund established, start saving for the bigger things. You might consider having money taken from your paycheck and placed in a savings account. You won’t miss what you never see. Or have it taken from your checking account. I have a regular withdrawal taken from my checking account. I never even notice when it goes, but the savings account is adding up quite nicely.
Let’s start the new year with money in the bank and a plan to keep improving your financial fitness through 2014.
Roxie Rodgers Dinstel is a professor of extension on the Tanana District Extension Faculty. Questions or column requests can be e-mailed to her at email@example.com or by calling 907-474-2426. The Cooperative Extension Service is part of the University of Alaska Fairbanks, working in cooperation with the U.S. Department of Agriculture.