Have You Completed Your New Year’s Financial Resolutions?
By Ilyce Glink
Managing Editor of Equifax Finance Blog & Contributing Writer, CBS News and Yahoo
The holidays are here, and 2014 is right around the corner. Before you sit down to make that list of New Year’s resolutions, check in on the ones you made last year. Did you save as much as you wanted? Are your retirement goals on track? Did you want to have your credit card paid off by now?
I always make New Year’s financial resolutions, and then look back at the end of each year to make sure I’m on track to meet my goals. The two financial resolutions I made at the beginning of this year were to save more and spend less.
Let’s see how I’m doing so far:
1. Save More
I always try to save at least 10 percent of my gross annual income. If you’re wondering how much you should save each year, the answer is simple: as much as you can.
You can see where you’re at financially by assessing how much you've saved in any the following: 401(k), 401(b), 457, IRA, or other qualified retirement plan; Roth IRA or Roth 401(k); checking or savings account; non-retirement brokerage account; 529 college savings plan; and other savings vehicles, such as CDs, money market accounts, and HSA accounts.
If you saved at least 10 percent of your gross annual income ($5,000 for every $50,000 earned, for example) in any of the vehicles above, that’s great. If not, it’s never too early to start saving for next year.
Here are a few tips to help you reach that 10 percent minimum.
- If you get a salary increase, try to put it in your 401(k) or other savings accounts.
- Ask to have part of your check direct deposited into these accounts.
- If you get a bonus along with or instead of a raise, put it straight into savings.
My goal for 2013 was to save 15 percent of my family’s gross annual income, and so far we’re on track.
2. Spend Less
My second New Year’s resolution was to find ways to spend less every day. The less money I spent, the more I was able to save.
I found ways to turn big expenses into smaller expenses and, when possible, found ways to eliminate small expenses altogether.
Seemingly small expenses can add up over the course of a year. If you tend to eat out a lot or see every new movie that hits theaters, for example, you’re spending a lot of your hard-earned money—even if it’s only $10 or $20 at the time of payment.
You can save some money and still have fun by “trading down.” Reserve movie night for only special occasions, and try to eat out once a month instead of once a week. By cutting down on expenses like these, you’ll see your savings grow and you’ll be closer to reaching your financial goals. Trading down definitely works for my family.
Since I’m on track for my 2013 financial resolutions, I’m starting to consider my goals for 2014. Here are a few that might work for you:
- Pay off your credit cards
- Save 20 percent for a down payment on a home
- Give 5 percent to charity
- Reduce bills by $100 a month
- Add to your emergency fund
- Earn a raise at work
- Adjust your tax withholding
- Cook at home more
- Review your insurance policies
- Get your credit report
- Improve your credit score
Before you can set financial goals for the coming year, it’s important to evaluate whether you’ve achieved the goals you set for yourself in 2013. If you have, it may be time to set your expectations higher. If you haven’t, you may need to tweak your goals to make them more attainable.