5 Must-Follow Financial Resolutions for the New Year

A new year, a new resolution. Common resolutions run the gamut from the spiritual to the mundane, the altruistic to the self-serving, but most of us have one or more each year.

Exercise more, eat less, lose the holiday weight, be on time for all appointments, be less judgmental, be friendly to strangers, and the list goes on.

If you’ve been meaning to take new steps to get your finances under control, now is the time to find that extra motivational push, and start the New Year right. With that in mind, here’s a few suggested financial resolutions for 2011:

1. Fully fund your IRA

This one is a bigger deal than many folks think. This year, the maximum contribution for those under age 50 is $5,000. Those 50 and over are able to contribute up to $6,000 per year.

Younger readers take note: the dollars you invest today can multiply into thousands thanks to the power of compounded earnings. Experts agree that waiting to start saving for retirement means saving much more in later years to make up for opportunities lost when you were young, so open an IRA account and start saving today.

2. Take full advantage of employer retirement matching

This is another big one. If your employer will match up to a certain percentage of your earnings contributed to your retirement account, make sure you contribute that amount. To do otherwise is basically to short-change yourself out of free money that will be a huge benefit during retirement.

3. Research major expenses so you can saving

Everyone thinks of savings as little things we need to go without. “Skip the latte,” conventional wisdom says. If you’re spending $5 each day on a mocha skim frappe, then you might be sabotaging your finance goals.

But, you may be sending more dollars out needlessly each month on larger expenses. This year, make it a point to review what you’re spending on phone, internet, car insurance, life insurance, etc. If you’ve thought about refinancing for a lower interest rate on your home, make this the year you research refinancing to see if it can save you money.

4. Spend less on entertainment

Everyone loves a trip to the movies, but those costs can add up quickly. $10 per ticket, inflated prices on popcorn, soda, and candy all add up to an expensive night for two.

If you can’t wait to see the last Harry Potter movie, don’t deny yourself. But, this year, consider a trip to the rental store and a bag of microwave popcorn over an expensive night out at the theater.

5. Bag lunch instead of buying

This one may seem small, but lunch prices can add up quickly. Consider this: a chicken salad purchased at an organic lunch spot can cost you $10. A bowl of soup can cost $5. You can make five salads or a pot of soup at home and eat lunch for an entire week for much less.

Don’t have time during the week to make lunch for the next day? Consider foods you can make on Sunday night for the week ahead. A pot of chili and a loaf of bread can feed you for a full week’s worth of lunches.

There you have it, a few financial ideas to get you started this year. And here’s one as a bonus:  Make this year the year that you promise yourself to think about your spending and how you can curb it.

Spending problem areas vary from one person to the next. It might mean going to the library instead of the bookstore, or buying an espresso machine to make $5 lattes much cheaper at home. Make this year the year you figure out how you could spend less and have a HAPPY NEW YEAR!

Topics: Personal Finance

3 Responses to “5 Must-Follow Financial Resolutions for the New Year”

  1. Kyle @ The Penny Hoarder

    #4 was our New Year’s Resolution for this past year. It’s amazing what you will come up with if you force yourself to get creative. We signed up for Netflix and dropped the cable. We even found some local theaters that have “Pay What You Can Nights”. Its great because we can take in a play/musical for whatever we can afford that week.

  2. Great suggestions.

    In regards to 1 and 2, I would add – review your overall asset allocations and make sure they are where you want to be. Having the correct allocation for your assets and stage of life provides better risk management and investment outcomes.

    In regards to the rest, saving money is great, but putting the saved money to work for yourself by investing it is even better.

    The best to you in 2011!

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