Several financial resolutions to consider in 2014
About 45 percent of Americans usually make New Year’s resolutions, according to a survey from the University of Scranton. But the same survey shows that only 8 percent of us actually keep our resolutions.
Perhaps this low success rate isn’t such a tragedy when our resolutions involve issues like losing a little weight or learning a foreign language. But when we make financial resolutions — resolutions that, if achieved, could significantly help us in our pursuit of our important long-term goals — it’s clearly worthwhile to make every effort to follow through.
So, what sorts of financial resolutions might one consider? Here are a few possibilities:
• Boost contributions to retirement plans. Each year, try to put in a little more to an IRA and 401(k) or other employer-sponsored retirement plans. These tax-advantaged accounts are good options for a retirement savings strategy.
• Reduce debts. It’s not always easy to reduce debts, but make it a goal to finish 2014 with a smaller debt load than when entering the New Year. The lower the monthly debt payments, the more money available for college savings and retirement planning.
• Work on building an “emergency fund” containing six to 12 months’ worth of living expenses, with the money held in a liquid account that offers a high degree of preservation of principal.
• Plan for protection needs. Don’t already have the proper amounts of life and disability insurance in place? Put this on the “To Do” list for 2014. Also, steps should be taken to protect one’s self from the considerable costs of long-term care, such as an extended nursing home stay.
• Don’t overreact to market volatility. Too many people head to the investment “sidelines” during market downturns. Rally. Those who are not invested will miss potential market gains.
Edward Jones financial planners provided this article.