Adapted from MU Office for Financial Success Finance Tip of the Week blog post by Robert Weagley, Ph.D., Department Chair, Personal Financial Planning, University of Missouri Extension
Karen Blumenthal, a financial journalist for more than 25 years, wrote an article for The Wall Street Journal based on the holidays of the year and actions that people can take related to each holiday to fix their finances. It’s a good way to remember to “check in” with your finances throughout the year.
In a similar vein, the National Foundation for Credit Counseling (NFCC) released their survey of the financial New Year’s resolutions of 6,100 households. The NFCC found that the number one New Year’s resolution for households ranked as follows, each with the percentage that chose that action as their number one resolution.
- Decrease debt: 76%
- Improve my credit score: 11%
- Decrease dependence on credit cards: 7%
- Increase savings: 6%
While decreasing debt is certainly admirable and some would say reducing debt is a form of savings (as it improves one’s net-worth), the fact that only 6 of 100 households ranked increasing savings as their number one priority for the new year is disheartening. With the economic upheaval we have endured for the past few years, one would think increasing savings would be a high-ranking goal to provide some financial stability in case of job loss or other issues. While it is challenging to accomplish, most financial planners suggest that we should save at least 10 percent of our income for retirement, emergency planning, college savings and other goals. Since most of us still aren’t making saving a priority, here are some things we can do throughout the year (based on Blumenthal’s article) to keep our finances in order.
- New Year’s Eve/Day – Vow to increase your rate of savings. Have money automatically deducted from your paycheck and put in your retirement plan, your savings account, your money market fund or other accounts dedicated to your goals. Do this today, if you haven’t started already.
- Martin Luther King, Jr. Day – To celebrate the diversity of our country, review your investment plan to make sure it is diversified – across sectors, industries, market-capitalization, countries, etc.
- Presidents’ Day – Reduce your borrowing.
For the complete list of recommended actions you should take throughout the year, read the full version of this article at http://missourifamilies.org/