Who doesn't have a love/hate relationship with New Year's resolutions? We love the idea of starting fresh and doing everything correctly in the new year. At the same time, we hate the inevitable guilt and failure that hang over us when we don't fulfill our promises.
So, try achieving some of your financial goals this year with strategies that require no discipline. I can save you 15 minutes by telling you that much of the advice in this article comes down to suggesting you automate much of your financial transactions. Keep reading for ideas to help you fulfill specific resolutions.
Resolved: To increase retirement savings. One virtually painless way to increase your retirement savings is by increasing your contribution to your 401(k). The money disappears from your paycheck before you ever see it. If you want to make a large increase, but you don't want to bite the bullet all at once, start by depositing an extra 1% now. Go get that cute puppy calendar you got for Christmas and write a reminder on every other month to increase your contribution another 1% until you hit your goal.
If your 401(k) is in fine shape, but you want to contribute more to an IRA, establish automatic savings withdrawals from your checking or savings account to your IRA account. You can save $4,000 in an IRA in 2007, or $5,000 if you're age 50 or older. To maximize your contribution, that's a $333.33 monthly deposit, or $416.66 for those over 50. Put the withdrawal on autopilot and you'll never have to remember to save for retirement again. For extra credit, make sure all the dividends on your investments get automatically reinvested.
Resolved: To buy a new car, dining room set, plasma TV, or other major purchase without debt. You can guess where I'm going with this. Figure out how much your purchase will cost, then set up an automatic withdrawal to your savings account to fund the purchase. While you're waiting for the money to build, you can shop around, read product reviews, and impress your friends with your newfound expertise in computer hardware or auto safety standards.
Resolved: To save more for Jack and Jill's college expenses. Yes, the automatic savings plan strikes again. First, make sure you have your retirement funds in good shape. Then, consider establishing a tax-advantaged account, like a 529 plan. Start filling it up with automatic contributions. Deposit any money sent as holiday gifts to get you started.
Resolved: To pay bills on time. There's hardly a service on the planet that won't suck their monthly bill right out of your checking account if you let them. Put your phone, cable, utilities, even your mortgage, on an electronic payment plan. You'll never pay a late fee again.
Resolved: To stop paying ATM and credit card fees. This one takes a tiny bit of discipline. The best way to banish ATM fees is to make a habit of stopping by your bank's machine on a regular schedule, like every Monday morning on your way into work, or every Friday when you duck out to lunch. Start doing it regularly, and the need for discipline turns into an automatic habit.
To steer clear of possible credit card fees, see whether your card's online system lets you set up email alerts. Some will notify you when statements are posted and when they're due. And, yes, you can also automate your payments.
Resolved: To stick to a budget. Without actually writing a budget (again, this is the no-discipline system), one great way to keep spending under control requires that you leave the credit cards at home. Just don't use them. Switch to a debit card, cash, or good old-fashioned checks. When you use those methods of payment, you have to think about whether you have the money in the bank. With a credit card, you don't have to think at all.
- Resolved: To reduce debt. Here's another plug for automation. Put your loan and credit card payments on autopilot. You'll save on late fees, and you can commit to paying more than the minimum amount each month. By knowing you've taken care of the basic payments, you can turn your attention to strategies for paying the debt off more quickly.
Accomplish all that, and you're bound to keep at least a few of your financial resolutions this year. For more ideas to simplify your financial life in the new year, read the first two parts of this series, which propose that you simplify your financial accounts, then clear out your filing cabinet.
- Don't Make a Million-Dollar Mistake
- You Won't Miss It Anyway
- Become a Millionaire -- Automatically
- Be a RoboInvestor