Auther Created By:
Andy Masaki On 27th Dec,16
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The tradition of New Year's resolutions dates all the way back to 153 B.C. Every year, as day one begins, we start making resolutions - for the betterment of our lives, to get back or lives on track, or for a fresh start.

Most of us pledge so many things to get our finances back on track. But do we miss anything?

We set our goals, but we forget don’t set the course. We don’t carefully plan to achieve the resolutions we make.

According to a recent study published in the Journal of Clinical Psychology, only about eight percent of us achieve the resolutions we make. Is this just because we undertake no real course to achieve the resolutions? Yes, perhaps we lack planning.

Today, we are going to discuss the five major financial resolutions that people take and focus on the steps needed to achieve those.

#1:Getting on top of your debt

We all hope to become debt-free. But if you really want to, you have to take decisive and definite steps.

Stick to zero usage policy as long as your credit cards are concerned. Spend only on the things that are really necessary to you. Stick to a realistic budget. Don’t splurge. Think of your budget as the only get-out-of-debt plan you got. Stick to it until you pay off everything you owe.

#2:Building an emergency fund

Building an emergency fund is important to shield against unforeseen calamities. But how much is enough?

As per industry experts, setting aside a fund in an interest-bearing savings or money market account to cover for at least 6 months’ worth of expenses in case you lose your job, go to maternity leave, confront a medical or other emergency. But how do you build one?

Look for leaks in your budget that quickly add up but can easily be shredded out, such as dining out. Also, you can transfer a fixed amount from your monthly budget to your emergency savings account at the beginning of every month.

#3:Creating a will

It’s wise that you’ve thought about creating an estate plan for your offspring. A will is significant in determining how your estate is distributed when you’re no longer around. But how do you get yours?

Many might suggest making use of the latest will preparing software. But it’s better to avoid taking such a measure. According to Marvin Toy, co-author of Smart Tips for Estate Planning, “If you want anyone to benefit from your estate, then hiring a lawyer to write your Will is money well spent. A well-written Will that is customized to your circumstances is a document that can often suit your needs for many years, or even decades.”

#4:Start saving for retirement

As long as saving for retirement is concerned, the one who starts early seems to be the clear winner. The earlier you begin, the better chances are that you’ll get to grow your retirement eggs for many years.

Ideally, people should set aside 15 percent of their income to have enough for a comfortable retirement. There are many ways to increase the amount you’re saving for retirement. Make sure you contribute enough to your 401(k) to get the full matching contribution from your employer.

Also, make sure to increase the amount you set aside every year - even it’s by just 1%. Invest the money that you don’t expect to touch for 10 years or more in broad-based stock mutual funds or exchange-traded funds.

#5:Saving for your kid’s college

It’s good that you’ve thought about your kid’s college education and contemplating to stockpile some resources to back the same. The best college savings plan where you can pour your hard earned money is the 529 plan, because here you will be able to withdraw the money tax-free.

Indeed, most of the college savings plans are operated by states, and almost each one has at least a second plan. Compare to see which is the best for you and start saving.

A substantial amount in hand won’t intimidate you to go for high-interest private student loans.

College is expensive, averaging $19,548 for a public college and $43,921 for a private institution. So the earlier you start saving, the better results you get.

Last Updated on: Tue, 27 Dec 2016

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