2014: The Year to Finally Keep Financial Resolutions
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By Sheryl Nance Nash,
The Fiscal Times
December 31, 2013

Promises, Promises. People are not only vowing to get physically fit, but financially fit.

More than half of consumers are considering financial resolutions, according to a recent study by Fidelity, a marked increase from 35 percent in 2009, and the survey's all-time high. Even as more people are resolving to clean up their finances, the top 3 resolutions haven’t changed over the past four years: save more (54 percent), pay down debt (24 percent), and spend less (19 percent). More than half of those surveyed said they would rather be more financially fit in 2014 than more physically fit.

Despite their resolve, consumers concede that there are headwinds. Half of those surveyed said they feel the economic uncertainty of the past year – such as the debt ceiling battles and potential changes in interest rates, may hurt their chances of keeping their financial resolutions in 2014.

That kind of attitude can set you up for failure. “Stop associating money with crisis,” says Noah St. John, author of The Book of Afformations: Discovering the Missing Piece to Abundant Health, Wealth, Love and Happiness. Rather than thinking about all the fun things you can do with money, like taking that vacation you've been dreaming of, you worry yourself sick over what you don't have and what could happen in the worst case scenario. Focus on what you have, not what you lack.”

It’s easier to fulfill a resolution if you set a specific, quantifiable goal. So, for example, instead of resolving to “save more,” resolve to max out your 401(k) or to put aside 10 percent of your income. The more specific you get, the easier it is to track your progress.

Once you’ve got a goal in mind, follow this advice to make it happen in 2014.

Related: 10 Personal Finance Predictions for 2014

Make debt payments a priority.
“I can't think of a more important item to tackle in 2014 than the reduction and elimination of personal debt,” says Brett Burzynski, president of The Burzynski Group, a retirement planning firm. “Who knows how much more time we have to take more advantage of these low rates.”

Start with your highest-interest debt, particularly credit cards. The average American has debt. Getting rid of that debt can be a huge boon to your finances. Credit card issuers are offering more and longer 0 percent transfer offers, which now average more than 10 months, according to Cardhub.com. Then put any extra cash (like a year-end bonus or a tax refund) toward paying down that debt as quickly as possible.

To free up even more money look at refinancing any additional debt. Interest rates have come up slightly from their record bottoms, but they’re still low by historical standards. If you haven’t refinanced a higher-interest mortgage or car loan, lock in low rates now.

Boost your savings little by little.
First make sure you’re contributing enough to your 401(k) to get any company match. Then, make sure you have an emergency savings account with at least six months’ worth of expenses stashed away. Once you have those basics covered, start dialing up the amount you put away. Typically, experts like to see savings at a minimum of 10 percent of take home pay, but if you’re not saving anything now just getting started will put you in a better financial position by the end of the year.

Once you’ve established the saving habit, start to ratchet it up. If you aren't contributing the maximum amount to your company-sponsored retirement plan, such as a 401(k), then simply increase your contribution to the plan. If you received a pay increase for 2014, you can boost your 401(k) contribution by a percentage point without even feeling the pain. A quarter of companies’ 401(k) programs have an auto-escalation program, which will increase your contribution automatically each year.

Related: Why We Need to Teach Financial Literacy in Schools

Once you’ve maxed out your 401k, step up your game by contributing to an IRA or Roth IRA.  After that, start making regular contributions to a taxable savings vehicle, such as an investment account. Setting up automatic contributions can help. “However you accomplish it, increasing your savings will boost your net worth and improve your overall financial health,” says Peter Lazaroff, a certified financial planner with Acropolist Investment Management.

Track your spending in order to cut it
Use an online tool like Mint.com to see where your money goes each month and find places where you can cut back. Stop trying to keep up with the Joneses and take a hard look at whether all of your monthly outlays are necessary. Only one-third of Americans creates a detailed household budget, but experts say that doing so is key to spending less.

Evaluate monthly services such as cable or cell phone plans to see if there are ways you can reduce your monthly bills. Small changes like skipping the daily latte or eating fewer meals out will make a dent, but to make a big change in your bottom line need to slash your biggest expenses: Consider getting rid of a second car, downsizing to a smaller home, or moving to a place where the cost of living is lower.

Bonus: Make a plan
Here’s one resolution that financial experts wish that more consumer would make. Saving more and spending less is important, but so is having a forward-looking plan to deal with your financial future. Your plan should not only focus on the present, but also include concrete steps toward your future financial goals, such as saving for retirement or a child’s education.

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