With 2012 behind us, saving money may be at the top of your New Year’s resolution list.
Financial Advisor Erin Blue with Waddell & Reed, Inc. gives eight tips for dealing with your money in the coming year. If they seem overwhelming or unrealistic for your life, Blue recommends picking three to five to focus on.
#1: Increase your savings
Even if you’re putting away just $25 a month, it’s better than nothing. Everyone should have an emergency savings.
However, emergencies do not include those clothes or tech gadgets that are on sale now and may not be later. The fund should be reserved for real emergencies, like a medical accident or losing your job.
#2: Strive for 10 percent
Put 10 percent of your total income toward retirement. If that’s too much of your paycheck, do enough to get your company’s full match.
A lot of employers will give you a 3 percent match on your retirement fund, so if you set aside 7 percent of your paycheck, and your company contributes 3 percent, then you’ve met your 10 percent goal.
#3: Lose money fat
Make a list of money “needs” vs. “wants” and prioritize them.
Things like food, gas and mortgage payments are “needs,” but “wants” include some new clothes, lottery tickets, movie tickets or a daily Starbucks coffee. Try to decide which “wants” are most important to you and get rid of the excess.
You don’t have to get rid of everything you love, but instead of buying that daily lotto ticket, for example, try to buy one every other day.
#4: Resist debt
Many buy TVs, tablets or other high-priced items and justify it because they get 0-percent interest for a year on the purchase.
But that buy adds another $100+ per month payment to your budget in order to get paid off within 12 months. And if you don’t pay it off in time, you’ll get slammed with the interested anyway.
Even though it’s 0-percent interest, you still have to pay for it!
#5: Go out to eat less
Make a tally on the calendar for a few weeks every time you go out, taking note of breakfast, lunch and dinner. You’ll be surprised about how much you go out to eat.
If you average, say, four times a week, try to cut that number down to two times.
If you can’t cut down the number of times, then try to share meals or avoid appetizers, drinks or desserts.
#6: I want an allowance
One of the top causes of household fights is money. If you’re in a relationship, think about giving each other a $100 per month allowance (or whatever number works for your budget) that you can spend on whatever you want. That gives you some financial freedom.
#7: Money Mondays
Talk about money on a more regular basis with the other decision maker of the house.
If you don’t know what the other person is spending money on, somebody is going to get into trouble.
Even if it’s just 10 minutes while making dinner, take a look at your checking account balance, your 401k savings, your bills, your restaurant budget, etc. This way, you stay on the same page.
#8: Update or create wills and power of attorney documents
These are unpleasant to think about, so they often get put off.
No matter your family situation, it’s very important to have these documents. Blue recommends using an attorney to draw up these documents for you. Doing this puts you in control of what happens to your money, instead of someone else.
Waddell & Reed, Inc. Disclosure: This information presented in this article is solely for information purposes and is not to be construed as investment advice r3elated to your personal situation. Please consult a professional prior to making any financial decisions.
For more information about the topics discussed here, you can call Erin Blue at 970-243-4480.
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