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Resolutions for a Financially-Healthy 2010
By Pamela Yip December 28, 2009 As 2009 winds down and you plan for a more financially-healthy 2010, don’t forget this year’s key lesson. Free-wheeling, debt-hungry spending is out. Actively managing your personal finances is in. That sea change in consumer behavior grew out of the worst economic recession since World War II, a prolonged downturn that ravaged savings and retirement accounts. Granted, there are signs of improvement from a year ago. Some indications: But the recovery remains in its early stages. Since the recession began in December 2007, more than 7 million people have lost jobs, ballooning the unemployed to 15.7 million. And despite recent gains in Americans’ net worth, it remains far below its peak of $64.5 trillion before the recession began. That underscores the vast loss of wealth in the last two years. Paul Goebel, director of the University of North Texas Student Money Management Center, says he thinks 2010 can be “a year of growth and opportunity for everyone” if we don’t forget the not-too-distant past. Goebel offers the following tips for a financially-healthy 2010. Examine your goals Tracking your spending and analyzing your purchases will help you shift your resources to what’s important to you. Knowing where your money is going also will help you break wasteful habits. Murphy suggests documenting every penny you spend for three months. This exercise will create habits that will permanently change your behavior. Set up a spending plan Pay down debt Get reacquainted with using cash. When you’re counting out dollar bills from your wallet, the price of an item hits home. If you can’t break the credit card habit on your own, card issuers are leaving you no choice. In advance of new credit card regulations that will take effect in February 2010, issuers are raising interest rates, instituting fees and slashing credit limits. You can’t afford to max out your credit. It will harm your credit score and leave you without credit for emergencies, such as a job loss. Boost your savings One convenient way to do that is to set up an automatic savings plan—from your paycheck or your bank account—so you don’t get a chance to spend the money you’d save. “Make sure that you have three to six months’ worth of living expenses set aside in a separate account to take care of life’s unexpected moments,” Miller said. “If you are short, you should create a plan to restock your fund as quickly as possible.” Have an emergency plan Tips for 2010
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