NEW YORK (1/3/12)--Move over, health and fitness. When it comes to New Year's resolutions, beefing up personal finances is right up there with cutting calories and slimming down (USNews.com
The number of Americans making financial resolutions this year jumped to 42%, up from 35% last year, according to Fidelity Investments' annual study (Fidelity.com
Dec. 15). Nearly half (46%) of those considering a financial resolution say saving more is their top priority, with a median annual target of $2,400 for long- and short-term goals, double last year's goal of $1,200. And 66% say the recent economic volatility will help them stick with the resolutions they made in 2011.
The economy is consumers' greatest source of stress, followed by personal finances, job and health, according to a recent survey by Principal Financial Group, Des Moines, Iowa. About one of five workers say not saving enough during 2011 was their top financial blunder, while 18% ranked increasing debt as their top mistake.
If putting your financial house in order is a priority for 2012, experts advise focusing on what you can control instead of what you cannot. Develop a specific plan during the next 12 months to achieve one or more of these financial goals:
Stop spending more than you make. It's a simple, sure-fire way to stay out of debt.
Pay down debt. List all debts by interest rate. Apply a greater percentage of your total debt payment toward the highest interest-rate debt first while making at least minimum payments on all the others. Use some low-interest-bearing savings to pay down high-interest debt. Once the debt is paid off, use the extra cash to build up savings again.
Pay bills online, and on time. You'll save time and money, and eliminate late payment fees.
Reduce monthly expenses. Review insurance contracts and call competitors for quotes. Cancel unnecessary add-ons to your phone bill. Check out energy.gov for more ways to cut utility usage.
Automate savings. Transfer a set amount regularly and beef up that emergency fund.
Take control of investments. Diversify your portfolio, contribute the maximum or as much as you can to your employer's company plan if you have one, start an Individual Retirement Account (IRA) or Roth IRA and fund it with equal monthly contributions; use several retirement calculators to figure out how much money you'll need in retirement.
Finally, set goals that are specific and measurable. "I want to save money" doesn't cut it. Change that to, "I will save $1,200 in 2012 by putting $100 a month into my emergency savings account with money saved from eating out less, borrowing DVDs from the library instead of renting them, and adjusting the thermostat." Make sure your goals fit within your overall budget and strive to be in better shape--financially and
health-wise--at the beginning of 2013.
For more information, listen to "Build Your Emergency Savings Fund" in the Home & Family Finance Resource Center.