Some surprising resolutions for financial success in the New Year
By Teresa Mitchell
Almost everyone makes resolutions at the start of a brand new year. Last year, more than half of Americans added a financial goal to their list, according to a Fidelity study.
Are any of these smart money moves on your list for 2014?
Make a money date
Schedule a monthly time to share financial issues with your spouse or significant other is very helpful in maintaining a healthy, happy personal and financial relationship. According to a National Endowment for Financial Education study, 67% of financial dishonesty leads to an argument; 16% said it led to divorce.
Make your 401(k) contribution
Many companies that offer 401(k) plans typically match employee contributions. The most common 401(k) match is now $1 per $1 on the first 6 percent of employee deferrals. This is a great deal combined with the tax savings you get by taking income off the top with your own employee contributions.
You feel much more in control if you set a savings budget during your income earning years and a spending budget during retirement. Automating regular expenses and designated savings makes it simpler to stay on top of discretionary spending. You can even add impound accounts to your mortgage so bi-annual or annual bills such as property taxes and homeowner insurance don’t trip you up.
Make an end-of-life plan
Whether it’s simply executing a will or formulating a game plan for disability and long-term care, this usually ends up last on the To-Do list. The first step is recognizing the financial realities of living a third of your life after age 60.
Create an emergency fund
An immediate stress buster is to sock away six months worth of living expenses in an emergency fund. For a typical single person, that’s normally $10,000 to $15,000. If you have a family and a mortgage, aim for around $30,000. It’s more doable if you make automatic payments from your bank account.
Reduce financial stress
It’s no surprise that health and wealth are interconnected. Sociological research data indicate that four factors strongly predict happiness and overall well-being in most cultures: health, economic status, employment, and family relationships. Additional research has shown that people who take an active role in planning and learning about their finances were less stressed and more confident in their financial situations. A MetLife survey showed that attending an educational program, for example, increased one’s feeling that they were in control of their finances by 25 percent.
Ask yourself these questions
- How long are you likely to live?
- What do you look forward to about getting older? What do you dread?
- Are there ways you can maximize your cognitive functions as you age?
- Is your current living arrangement the best choice for you as you age?
- Are you concerned that you or your parents will outlive financial resources?
- Does your family know what you would want if you could not speak for yourself?
- What services would be available if you became sick, frail, or needy?
- Who will pay for long-term nursing or home care should you need it?
If all of these tasks seem too overwhelming to work on simultaneously, select a few of the most meaningful ones to you and get started. Share your goals with those close to you. Telling a few people can increase your motivation and they may even have helpful suggestions.
You can make 2014 a pivotal year in your financial health. If you need professional help, a financial advisor can evaluate your situation and work with you to set realistic goals for success.
Teresa Mitchell, CFP, is a certified financial planner with Willow Creek Wealth Management, Inc., Sebastopol, one of the leading wealth management firms in California. For more information go to www.willowcreekwealth.com or call 707-829-1146. Wealth Matters is a monthly column from the firm’s advisers.
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