Adapted from MU Office for Financial Success Finance Tip of the Week blog post by Robert Weagley, Ph.D., Department Chair, Personal Financial Planning, University of Missouri Extension via Missouri Families enewsletter
Karen Blumenthal, a financial journalist for more than 25 years, wrote an article for The Wall Street Journal based on the holidays of the year and actions that people can take related to each holiday to fix their finances. It’s a good way to remember to “check in” with your finances throughout the year.
In a similar vein, the National Foundation for Credit Counseling (NFCC) released their survey of the financial New Year’s resolutions of 6,100 households. The NFCC found that the number one New Year’s resolution for households ranked as follows, each with the percentage that chose that action as their number one resolution.
• Decrease debt: 76%
• Improve my credit score: 11%
• Decrease dependence on credit cards: 7%
• Increase savings: 6%
While decreasing debt is certainly admirable and some would say reducing debt is a form of savings (as it improves one’s net-worth), the fact that only 6 of 100 households ranked increasing savings as their number one priority for the new year is disheartening. With the economic upheaval we have endured for the past few years, one would think increasing savings would be a high-ranking goal to provide some financial stability in case of job loss or other issues. While it is challenging to accomplish, most financial planners suggest that we should save at least 10 percent of our income for retirement, emergency planning, college savings and other goals. Since most of us still aren’t making saving a priority, here are some things we can do throughout the year (based on Blumenthal’s article) to keep our finances in order.
• New Year’s Eve/Day – Vow to increase your rate of savings. Have money automatically deducted from your paycheck and put in your retirement plan, your savings account, your money market fund or other accounts dedicated to your goals. Do this today, if you haven’t started already.
• Martin Luther King, Jr. Day – To celebrate the diversity of our country, review your investment plan to make sure it is diversified – across sectors, industries, market-capitalization, countries, etc.
• Presidents’ Day – Reduce your borrowing.
• Religious Holidays – Whether you celebrate Easter, Mawlid-al-Nabi, Shavuot, the Equinox or any other religious holiday, use it as a time to celebrate your birth and heritage. Consider the financial lessons, good and bad, that you have learned from your family, friends and religious affiliations. Do your best to practice the “good” and to cease practicing the “bad.” This will also build upon your human capital, your most precious asset.
• Memorial Day – First, be grateful for the sacrifices of others that have allowed us to have our freedom and then talk to your family about estate planning. Make a plan for your own death that incorporates your goals for giving to others. Make sure you know the plan of your parents and, if they don’t have one, suggest they get one.
• Fourth of July – Ask yourself if you are financially free. The American Revolution occurred because we did not want to pay taxes without representation. Many of us have chosen to be servants to whom we owe money. In a sense, we have voluntarily sacrificed our freedom in exchange for working to pay interest. Choose freedom.
• Labor Day – Remember what Benjamin Franklin said, “At the working man’s house, hunger looks in, but dares not enter.” Good work is a blessing and protects us from recessions and economic change. Our gift to our economy is our labor and creative contributions working together to increase the well-being of all. Moreover, those that work hard with specialized training and unique personal skills will always be valued. Hunger will not knock on your door if your house is built on productivity.
• Thanksgiving – Giving thanks for what we have is a key to making financial progress. Make a list of what you think you need, as well as what you want. Focus on your goals and, in turn, your needs (as opposed to your wants) will become clearer and will be more satisfying to achieve. If you choose to focus on your wants, you’ll always want more.
• Christmas, Hannukah, the Winter Solstice, Kwanzaa, etc – As the winter holiday season approaches, remember the gift of giving and what truly matters. Often your most fond memories or the memories that your children will cherish are unforgettable moments with family and friends, not gifts or material things. So before you spend beyond your means, remember that happiness and satisfaction are not “pricemore,” they are priceless.
Happy New Year! May yours be a financial success.