Do you remember your resolutions from last January? If so, how did you do?
Do you make any gains towards your personal financial goals or was this year a total financial washout for you? It’s now time to look forward to the New Year and look for ways to improve in 2014. Most people didn’t obtain their resolutions from last year. According to a report from the University of Scranton’s “Journal of Clinical Psychology,” only 8% of us actually achieve our New Year’s resolutions.
The good news is that you get a fresh start at them each year. Here are some tips to achieve your financial resolutions in 2014:
Calculate Your Net Worth
The New Year is as good a time as any for determining your financial net worth. Calculating your net worth is a key step to assessing your financial health and reaching your financial goals. Take the time to consider all your assets and liabilities so that you have a clear understanding of how to prioritize your spending and saving habits.
If your employer offers retirement plans such as a 401(k), 403(b) or 457 you may want to consider maxing out your retirement contributions by budgeting to contribute a set amount each month.
Are you self-employed? If so, depending on your income, you can contribute to an SEP IRA, profit-sharing plan or independent 401(k) plan. And if you’ll be 50 or older by December 31st, the contribution limit jumps for independent 401(k)s, helping you save even more.
Even if you’re covered under a retirement plan at work, you and your spouse can each contribute to a Traditional IRA or Roth IRA, as long as your combined taxable wages and net self-employment income is not less than the total amount contributed. Anyone 50 or older can contribute an extra $1,000, increasing the total allowable contribution to $6,500, or $541.66 per month. Keep in mind, however, that in 2014, a modified adjusted gross income of $60,000 to $70,000 ($95,000 to $155,000 for married couples filing jointly) put you in the phase out range for deducting your IRA contributions.
Savings and Debt Reduction Goals
Having easy access to you funds makes it tempting to spend money that you can easily attain. To help you reach your goal, try transferring amounts for savings from your checking account to a designated separate savings or investment account that is not easily accessed. This will make it less tempting for you to spend the money that you have managed to save.
Your Investment Portfolio
Rebalancing your investments will allow you to observe what sectors over-performed and those that under-performed. Chances are that the sectors that did the best last year may not enjoy a repeat performance this year. By rebalancing your portfolio to its original or updated asset allocation, you will have the opportunity to lock in gains from the sectors with the best returns.
The Bottom Line
Be careful about setting too many or unrealistic financial goals otherwise, you may be unable to accomplish any of them. It may be a good idea to maintain a checklist to keep track of how you are doing throughout the year, so that you can make any necessary modifications along the way.
What are your financial goals for the New Year? Leave us a comment below or on Facebook (click here)!