New York -- Every January, it’s the same drill. This is the year you will cut your debt, save money and spend more wisely.
And you, like millions of others, will fail again for no good reason.
Want to break the cycle of broken New Year’s resolutions? The professionals say you’ve got to get automated, get educated, and get over the fear of making changes.
But first things first.
Get rid of those hazy promises to yourself about your fiscal behavior. Sit down and make a list about exactly what you want to achieve, advises Scott Halliwell, a USAA financial planner. Designate actionable items for each month, starting with spending January to get your budget and savings plan on track.
There’s a difference, for example, between “I want to increase my savings,” and “I want to have $1,000 more in the bank by April 1.”
How do you get from here to there? Here’s how you start:
Automate as much
One key way to stay on track is to make things as easy as possible.
Setting up automatic savings is easy on most bank websites. Doing so makes you much more likely to keep that resolution to save more. Add auto bill pay, and you will take a big step toward avoiding late charges that run up costs unnecessarily. Making payments on time is also the single most important thing you can do to maintain a healthy credit score.
Everyone is entitled to one free credit report per year from each of the three major agencies, TransUnion, Equifax and Experian.
The data in these reports is what’s used to determine your credit score, which in turn is what banks and credit card companies use to decide if they’ll lend to you and at what interest rate. You’ll get a good picture of what problems exist that can drive down your credit score, like late payments or a forgotten bill that went to collections. And you may find mistakes that could be hurting your score as well.
Take advantage of
all your job benefits
You may be up to speed on how much your co-payments cost, but are you aware of all the benefits offered through your health insurance? Log in to your insurance company website to find out if you’re eligible for reimbursement or discounts on health club memberships or programs to help you with weight loss or quitting smoking. You may even be able to check a few other resolutions off your list at the same time you save a few dollars.
Rebalance your investments
Adjust the mix of stocks, bonds and other assets you hold to keep them appropriate for your stage of life and the amount of risk you’re willing to take. In general, most advisors say the older you are, the less risk you want to take, which means a higher portion of bonds than stocks.
Even if all you have is a 401(k) plan through work, it’s important to make sure the funds you picked when you first enrolled are the best choices for you now. If you own additional mutual funds or have an IRA, those items should be considered as well, to create as complete a picture as possible.
The market volatility of the past few years adds to the importance of taking a periodic look at your holdings, but may make it more difficult to decide the best steps to take.
So especially if you haven’t made any adjustments in the last few years, it may be worth spending a few dollars to enlist the help of a financial advisor.
“The hardest part for rebalancing for most people comes down to the practical application for doing it,” said USAA’s Halliwell. “One of the things that getting outside help can do for you is help remove some of the emotion.”