It’s hard to imagine that another year has passed by so quickly. In the wake of the fiscal cliff coming down the stretch, it seems ironic that we would be discussing financial New Year’s resolutions. You would think that our politicians and policymakers alike could learn a little bit from my top five this year. No matter how all of the information gets relayed to us about this fiscal cliff, you can be 100% certain of simple mathematics. You cannot make progress when your expenses exceed your revenue and more often than not leverage will get you in deep financial trouble. If you can learn that basic financial principle from what you have witnessed with our country’s finances, you’ll be much better off when you plan your own finances. So here are five financial New Year’s resolutions that can make a dent in your bottom line.
- Balance The Budget – If you had another year in your personal finances where it feels like you fell further behind, then it is time to get a spending plan in place that ensures you won’t outspend your income. Unlike the Government, you can’t print more money to grow your overall revenue. This means it really comes down to making spending cuts. Assess what fixed expenses that you simply cannot remove and then determine what two or three discretionary expenses you might be able to shrink or live without. Put in your calendar a reminder at the end of each month to look at your intake and your spending to determine if you are on track.
- Cancel A Service – If you look closely at your year end credit card statements and bank account statements, you’ll quickly find out that there is one service in 2012 that you just simply didn’t use. Perhaps there was a gym membership you signed up for that it turns out you rarely went to during the year. It’s likely that you subscribed to magazine or a newspaper service that you didn’t use at all. Or perhaps you have a club card or perks card that never even left your wallet. Make a resolution to cancel just one service.
- Get Your Frequent Flier Points In Order – I’ve noticed that most people end up with somewhere between 4 to 6 different types of point program whether it is airline, hotel, or credit card points. Often, there are better times during the year to use these points where you can stretch them out for more hotel nights or a discount on the points you need to use to cash in a particular reward. However, if you have no idea what kind of point levels you even have then it will be really hard to ascertain what is the right strategy with your points. We’ve got an electronic program to watch all of these, but best to get them in order before you plan all of your vacations.
- Save A Third Of Your Raise – When you get your annual bonus or yearly increase in the first few months of the year, make sure you set up an automatic increase in your savings whether through payroll or some type of ACH program. The worst thing in the world to do is to plan your bonus for some type of expense project. If you don’t capture that raise with increased 401k savings, college education savings, or some other type of brokerage account, it will likely find its way out the door to some discretionary spending.
- Pay Off At Least One Debt – Debt is your adversary. It can only weight you down. Take every opportunity you can to pay off at least one credit card, one piece of student debt, or your car loan. It may be ambitious to pay off your house, but the quicker you do that the more confident you will feel about your financial future.
Usually losing weight and fixing personal finances are two of the most popular New Year’s resolutions. If you can make a smart money move and implement just one or two of my suggestions, you’ll get your financial new year off to a bang!
Written by:
Ted Jenkin
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Ted Jenkin is a frequent guest columnist for the Wall Street Journal and Headline News Weekend Express. He is the co-CEO of oXYGen Financial. You can follow him on LinkedIn @ www.linkedin.com/in/theceoadvisor or on Twitter @tedjenkin.
