Financial Planning / Money Saving Tips / Wealth & Prosperity

WalletHub’s 14 for ’14: Financial Resolutions for the New Year


"WalletHub’s 14 for ’14: Financial Resolutions for the New Year With the economy finally improving and Congress even getting its act together, it’s time for us as consumers to do our part. And what better time than New Year’s to make some resolutions for financial improvement? With that in mind, the personal finance website WalletHub today followed up on its 2014 Wallet Predictions with a list of the 14 most important Financial New Year’s Resolutions for 2014.

Below is a brief overview of these resolutions below, along with commentary from WalletHub CEO Odysseas Papadimitriou (OP) – a personal finance veteran who previously served as a senior director in Capital One’s credit card division:

  1. Set Daily Goals & Devise an Incentive Plan

    “Resolutions, by their very nature, are goals, but they too often take the form of broad proclamations that lack both specificity and a plan for implementation. So, rather than setting high-level, abstract goals, determine what daily habits you’ll need to change in order to gradually improve your financial situation and develop incentives that will prevent you from abandoning your quest prior to fulfillment. After all, as my ancestor Aristotle once said, ‘We are what we repeatedly do. Excellence, then, is not an act, but a habit.’”

  2. Make a Budget 

    “Only two in five adults maintain a budget and keep close track of their spending, according to the National Foundation for Credit Counseling, and that ratio has remained the same since 2007. It’s therefore no surprise that U.S. consumers have racked up tens of billions of dollars in credit card debt since then. Fortunately, the rise in online money management tools makes expense and payment tracking easier than ever. Supplemental strategies, like the Island Approach or asking your credit card issuer to lower your spending limit to match your budget, are conducive to the adoption of sustainable spending and payment habits as well. Ultimately, your budget should reflect your annual financial goals and effectively serve as a roadmap for achieving them.”

  3. Find a Wallet Workmate 

    “Much like writing down your goals makes them more real from a psychological perspective, apprising another person of your financial improvement plans is a great way to foster stick-to-itiveness. Not only are people far less inclined to deceive or disappoint others than they are themselves, but having a support system that you can leverage for tips and advice will also reduce the barriers to goal achievement.”

  4. Save at Least $300 on Monthly Bills

    “Show me a person who has no room to save on their monthly bills and I’ll show you a fool. From cell phone contracts and premium cable packages to groceries and utility payments, we all have some budget fat than could stand to be cut. So, put all of your accounts and habits on the table in the New Year, determine whether or not you are getting the best possible deals, and adjust accordingly.”

  5. Increase Savings by 10% Across Key Accounts

    “The Great Recession taught us a number of important lessons about strategic financial planning as well as the value of cash reserves. Now is the time to apply what we’ve learned. So, if you don’t have an emergency fund, a retirement fund AND a college fund for your kids, open them up and get to saving. Your goal should be to end the year with 10% more money in each of these accounts, so make sure to factor that into your budget. And while it may surprise many people, establishing an emergency fund is actually a higher priority than paying off debt because without cash reserves, you’ll only be an unexpected expense or income disruption away from ending up right back where you started, even if you manage to get out of debt in the short term.”

  6. Reduce Non-Mortgage Debt by 15%

    “Considering all the time and effort we put toward finding deals and maximizing investment returns, putting up with the corrosive effects of compounding interest doesn’t make too much sense. The best approach to debt repayment is to attribute the majority of your allotted monthly debt budget to the balance with the highest interest rate, while making minimum payments across all other balances. Once your most expensive debt is paid off, repeat the process with your next most costly balance.”

  7. Figure Out Health Insurance

    “We are currently in the midst of one of the most substantial changes to the health care market in decades, and it’s clear that many consumers don’t know which way is up in this new insurance environment. So, whether you love or hate Obamacare, it’s important to put those feelings aside and determine what adjustments need to be made in the best interest of your family’s physical and financial wellbeing. For example, high-deductible plans may require new savings objectives or Medicaid expansion may necessitate signing up for health insurance for the first time. You might even consider moving if a neighboring state’s health care policies are far more favorable than where you currently reside.”

  8. Consider Hands-Off Investing

    “Investment management is a full-time job, and even the pros regularly make mistakes. It’s therefore important to ask yourself if you have the time, inclination, and knowledge base to actively manage your own investment portfolio. For the average person, the answer to those questions is likely to be no, which means a portfolio comprised of well-diversified ETFs and mutual funds is the way to go. After all, only 24% of professional investors beat the market in the last decade.”

  9. Take the Pulse of Your Career

    “It’s easy to forget the big stuff as you focus on saving a dollar here, investing a dollar there, but there are few areas that affect your finances more than your choice of career and where you are employed. Reevaluating where you stand professionally will enable you to get a sense of what other potential opportunities are out there, how competitive your compensation package is, and even whether your location may be holding you back. Even if this research does not lead to a career change, you’ll gain some valuable peace of mind and will have some useful data to leverage the next time you negotiate your contract.”

  10. Feed Your Financial Literacy

    “Financial literacy is much more than a buzzword. Rather, it’s the key to responsible money management and preventing history from repeating itself as far as the Great Recession is concerned. Not only is it important to instill in our children the value of a dollar and the importance of saving, but we must also give ourselves a regular refresher course in order to make sure that we practice what we preach and that our lessons actually hold water. So, make it a practice to shore up financial knowledge gaps, and apply what you learn to your money management. This is one investment that will surely pay off big time.”

  11. Get Some Exercise

    “The ties between physical, mental, and financial health are well established. We know that people who exercise regularly are happier, more productive, and have better memory. So, if your significant other telling you to put down the doughnut and get off the couch isn’t enough to spur you to action, consider your wallet wellness instead.”

  12. Replace an Hour of Pure Entertainment with Growth Entertainment Every Day

    “Successful people all share a number of important traits, two of which are the constant pursuit of self-improvement and the maximization of down time. Considering that the average American watches nearly five hours of television each day, according to Nielson, it shouldn’t be that difficult to replace one hour in front of the boob tube with an hour reading a book, learning a new skill, or otherwise improving yourself as both a person and a professional.”

  13. Don’t Forget to Give Back

    “Being charitable is all about putting yourself in the shoes of those who are less fortunate. It shouldn’t be too difficult to do so these days, considering the struggles so many of us have endured throughout the housing market collapse, ensuing recession, and painstaking economic recovery. Not only will giving back help you make a real difference in someone’s life, but it will also make you realize how many luxuries we take for granted.”

  14. Stress Test Your Finances

    “As Benjamin Franklin once said, ‘By failing to prepare, you are preparing to fail.’ That sentiment is perfectly applicable to personal finance and should serve as the impetus for making sure that your household finances are ready for whatever comes your wallet’s way. One way to verify that you’ve dotted all of your I’s and crossed all of your T’s is to run a few War Games-esque simulations designed to mimic major life disturbances, such as job loss, disability or even the death of your family’s breadwinner. Such exercises may remind you about the importance of life insurance, disability insurance, sufficient health care coverage, financial reserves, and various other financial vulnerabilities that you’d rather find out about ahead of time.”

Try WalletHub – The First Ever Personal Finance Social Network (Odysseas Papadimitriou): While I am admittedly biased, I honestly believe that consumers who are serious about improving their financial performance should at least check out WalletHub. Not only does WalletHub make it easy to find the best financial products for your needs, but you can also read reviews on financial professionals and seek advice from fellow community members. In other words, WalletHub is the best friend a financial resolution can have.”
For WalletHub’s complete resolutions, visit: http://wallethub.com/blog/new-years-resolutions-for-your-wallet/1411/

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