Several resolutions were sent to me by our readership over the past week. The list follows and it contains some good ideas for positive financial change. The ability to change exists in everyone. (I will admit to doing some editorial work. My comments are in parentheses.)
1) Increase my efforts at work to enable me to keep my job.
2) Invest in myself. Get the most from my past investments in myself or use this time when the economy is sluggish to add to my human capital, either through furthering my education or exercise.
3) Cut credit card debt and track my spending to make sure that what I buy supports my goals. (Update your net-worth statement to see if you are making progress. Making investment gains during 2008, with traditional investments, has been difficult for everyone.)
4) Write down my goals, as a starting point for financial success. (Try to write down dollar amounts and the point in time you wish to achieve each goal. Then, monitor your progress.)
5) Use things I have instead of replacing them - just because I want something different. Eat more leftovers.
6) Saving through my checkbook. The plan is to round up the cost of things I purchase to the nearest five dollars. At the end of the year, the total sum saved will be a gift to myself. For example, if I purchase an item for $3.36, I will record it in my checkbook as $5.00. If I spend $42.15, I round it up to $45.00. Then, on December 1, 2009, I plan to take all of the money that I have saved throughout the year in my checkbook, and do something nice for myself. (Editor’s suggestion: make sure these savings are working for you and not just sitting there without earning interest, while you wait for your “Being Nice to Me” Day.)
7) Begin to make small, semi-monthly payments to index mutual funds throughout the year. I plan a long-term strategy of investing in the stock market, by having $100 a month go into a diversified set of mutual funds. (Try to put your maximum deposit into your retirement account, as well as establish an emergency fund.)
8) Check the expense ratios of my mutual funds to make sure I’m not paying too much for too little.
9) Look hard at major expenses and, if I can defer them to a later date, defer them. Keep driving my old car, while I save for a newer model.
10) Find things in my budget that I can live without. Examples might be: reduce the number of times I dine out, reduce the level of my cable television subscription to those channels I really watch, and/or purchase lattes only on special occasions. (Mondays through Fridays are not typically “special occasions”.
11) Take a hard look at my risk tolerance. Has the past year changed my tolerance for risk? If so, make changes in my lifestyle and investments in order to reflect my true values.
12) Reduce my use of my parents’ money for things that I want and try to limit my expenditures to things that I need. (Sent by a student.)
While far from exhaustive, this is a pretty good list of actions we can consider, as we begin 2009. I found this quote by Epicurus (BC 341-270), “Do not spoil what you have by desiring what you have not, remember that what you now have was once among the things you only hoped for.” Sounds like a good guide for living a life of financial success, regardless of who has the most toys!
HAPPY NEW YEAR!
- Robert O. Weagley, Ph.D., CFP(r)
Chair, Personal Financial Planning
University of Missouri
Columbia, MO 65211
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