We went to local financial advisers and asked them for two financial resolutions they’d suggest for 2013.
On New Year’s Day, 12 months of possibilities stretch ahead of us like a beautifully clean slate. Ever hopeful, we declare, “This will be the year,” and make resolutions to better ourselves:
I’m going to stop smoking. Learn to cook. Lose weight. Volunteer. And the ever popular — save more money.
Many financial planners suggest setting specific, even small, financial goals, rather than making broad, generalized promises.
So we went to local financial advisers and asked them for two financial resolutions they’d suggest for 2013.
Jay Seaton, counselor with the Canton-Akron office of Apprisen (formerly Consumer Credit Counseling Service), suggests doing everything you can to reduce high-cost debt, such as credit card balances.
1. Add $25 or $50 each month to the minimum payment; then, if you don’t use the card, the balance will be reduced. The mistake folks make is thinking they have to add large amounts ($200 or $300) each month to reduce the principal, and since they don’t have those larger amounts of free cash around, they keep paying just the minimum.
2. Get your free credit report from each of the credit bureaus. The only free site is www.annualcreditreport.com. Any other site is not free.
Josh Marks, owner Marks Wealth Management, Jackson Township, says “pay yourself first” for retirement savings.
1. You can borrow for a car, you can borrow for a home, you can borrow for a student loan, but you can’t borrow for retirement. I tell people to save as much as they possibly can without interfering with their daily lives. Try to max out a Roth IRA if you can — that’s the best retirement vehicle.
2. Diversify. When you think you are diversified, think again. Look into managed futures and alternative investments.
Lucien Stephenson, Qualified Kingdom Advisor at Stephenson Wealth Advisors, Plain Township, is concerned that “only 2 percent of the population has what they need to survive retirement.”
1. We need to rethink how we are saving for retirement, and look at different sources. My vision has changed on this, and I now tell clients to put money in a whole-life insurance policy and use that as a guaranteed savings vehicle.
2. Talk to a financial planner. Find a guide. The days of doing it yourself are over. It’s good to have your e*Trade or ScottTrade account, those are fine, but you need expert guidance.
Edward Bender, Bender & Associates Allstate Insurance, Uniontown, says to make one small financial sacrifice to help you create an emergency fund.
1. Pack your lunch once a week. Take the money you would have spent and start saving it. If you save $9.16 a week (lunch with tip), at the end of 2013 you’ll have $500. May not be enough to buy a hot water heater or pay 100 percent of a car repair, but it will reduce the amount you have to come up with.
Page 2 of 3 - 2. Buy life insurance to make sure your family is taken care of if something happens to you. It’s probably a lot more affordable than most people think.
Mark Clendenin, retirement specialist with Resource Financial Group, Canton, has made a New Year’s resolution himself, to earn more and spend less. “My wife and I have, over the last five years, resolved to get ourselves comfortable and happy. It might mean saying, I don’t mind shopping at Aldi’s once in a while, or I don’t mind clipping some coupons.”
1. I like to see my clients get to the point where they are happy with what they have. Don’t let the money side of it drive happiness.
2. Understand what you can get out of the markets and understand the risks you take if you want more.
Scott Pachan is an adviser with Lighthouse Coaching in North Canton, where the mission is to “educate, equip and inspire.”
1. The first step is to make a budget, take control of your finances. You can look back at the last month and find out what your money did, or look ahead to the coming month and tell your money what to do.
2. Set a goal to get out of debt. Be proactive and make a plan. Start saving.
MORE END-OF-THE-YEAR ADVICE
If you haven’t visited the Ohio State University Extension’s personal finance site yet, now is a good time.
Go to www.extension.org/personal_finance and poke around. You’ll find free advice and answers to financial questions, from child rearing and estate planning to investing and talking with aging parents about money.
For a lengthy list of ways to improve your financial situation, type the key words “small steps” in the search box. Here are a few ideas from the Extension’s “Small Steps to Health and Wealth” that are specifically for the end of the year:
1. Increase Your Retirement Savings. Ask your employer to raise your 2013 retirement savings plan contribution. Even an increase of one percent can result in thousands of additional dollars at retirement. Save at least the maximum amount that your employer will match. Many employers will match at least half of workers’ savings contributions up to six percent of pay. This is “free money” that should not be passed up.
2. Check Your Tax Withholding. If you received $1,000 or more as a tax refund in 2012, consider revising your W-4 form to increase your take-home pay. Use the extra income to save or to reduce debt. Contact your employer now to complete the paperwork so that it takes effect in January.
Page 3 of 3 - 3. Organize Your Tax Records. If you’ve been throwing receipts for tax-deductible expenses into an envelope or folder all year, now is a good time to add them up. You’ll need a tally for each category of deductions (e.g., business expenses, charitable contributions) to list on a paper tax form, or plug into a tax software program, or hand over to a professional tax preparer.
4. Benchmark Your Progress. Compare the performance of your investments in 2012 with that of the Standard & Poor’s 500. Your investment provider will soon be providing year-end performance data and the news media will report the performance of benchmark indexes. Compare these two figures to see how well your investments did.
5. Calculate Your Net Worth. See where you stand financially at year’s end with a net worth statement, also known as a balance sheet. Companies do this calculation every year to assess their current financial condition and you should too. Subtract the amount that you owe from the value of everything you own. The difference is your net worth. Ideally, your net worth will rise over time as debts are repaid, additional savings deposits are made, and the value of investments increases with dividends and capital gains.