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Last year, close to 40% of Americans made financial New Year’s resolutions, according to a Fidelity survey. Studies show that those who make resolutions are more likely to accomplish their goals than those who don’t, so now’s a great time to come up with a few resolutions of your own.
Not sure where to start? Here are five financial resolutions for 2018 that will help you get your financial life totally under control in the New Year.
1. Resolve to finally get your financial life organized
Have you ever missed a payment because you forgot when it was due, or lost an important receipt you needed for a tax deduction? Being disorganized can cost you money and time. This year, take care of these tasks to master your financial life:
2. Resolve to get your money into the right accounts
When was the last time you changed your credit card or your bank? Have you checked your investment accounts lately to find out about commission costs? Far too many people stick with the status quo when it comes to their accounts, even if there are better options. Here are some ways to make your money is in the right place:
3. Resolve to become debt-free
The average debt per indebted household in the U.S. is more than $131,000, according to a NerdWallet analysis. It might not make sense to pay off your mortgage early if you can invest and earn a higher rate of return. However, paying off high-interest consumer debt, like credit card and personal loan debt, should be a top goal in 2018. Here are the first steps you should take on the path to becoming debt-free:
4. Resolve to start living on a spending plan
More than three-quarters of all workers are living paycheck to paycheck, spending everything they earn, according to CareerBuilder. Here’s how to ensure you’re not spending your hard-earned cash unwisely:
5. Resolve to increase your retirement savings
Americans participating in 401(k)s saved just 6.2% of income in 2016, according to Vanguard. This is far below the 15% to 20% of income you need to save for retirement. To ensure you’re saving enough to avoid going broke as a senior:
- Choose the right accounts: Take advantage of all available tax breaks for retirement savings. Invest at least as much in a 401(k) as it takes to get any match your employer provides. Then, allocate any extra money into your 401(k), an IRA, and/or a health savings account. An HSA allows you to invest with pre-tax money and take out funds tax-free to cover healthcare costs, while an IRA often provides more low-cost investment options than 401(k)s — and all of the same tax breaks.
- Increase your contributions: Americans are living longer, and the market’s projected rates of return are dropping, so you’ll need to save more for retirement than the standard 10% previously recommended. Increase your contributions this year by at least a little bit. If you’re 30 years from retirement, an extra $1,000 invested in a 401(k) annually — just $83 monthly — could net you $110,218 extra in your 401(k) by retirement, assuming a 7% return on investment. Increase your contributions as much as possible by banking your raises and prioritizing saving in your budget.
- Make sure you’re not paying unnecessary fees: If you’re paying too much to invest, you could reduce your retirement account balance by hundreds of thousands. The difference between paying a 0.5% fee and a 3.5% fee on a $5,000 annual investment made from age 30 to age 65 is more than $286,000.
Your financial resolutions can help you put an end to money worries
According to Fidelity, 52% of people who made financial resolutions in 2016 felt strongly that they’d be better off financially in 2017, compared with 37% who didn’t resolve. Almost half of resolvers also said they’re in less debt than they were the prior year, compared with 35% who didn’t make a financial resolution.
This year, make your resolutions count. When you end 2018 with less debt, more savings, and more financial security, you’ll be very glad you did.
The Motley Fool has a disclosure policy.
The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.
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