It's New Year's resolution time and the personal finance press is full of suggested goals. Here are two of the better recommendations from a recent Yahoo Finance column. First, take advantage of the high interest rates being paid on savings accounts and money market funds, many of which are paying five percent or better. If you keep a high balance in a checking account paying little or no interest, consider moving some of that money into a higher interest savings account or money market mutual fund. Second, if you're eligible to participate in a 401(k) plan at work make sure you're contributing enough to take full advantage of any match your company offers. Your employer's match is the easiest money you'll ever make.
Matt's View
I would add two ideas to the list. First, if you're carrying a balance on your credit cards, make this the year that you get out of debt, or at least start moving in that direction. If you'd like help with this goal, drop me a line and I'll e-mail you a free and brief Dumping Debt packet. Next, check your credit report and buy your credit score. To get a free report from each of the three credit bureaus, go to annualcreditreport.com. While it's crazy that we have to pay for our score, that's just the way it is. So, buy your "FICO" score from Equifax, one of the three bureaus, for $7.95. Everyone should know his or her score because it impacts everything from mortgage rates to insurance rates. And, you should know this: the single most effective way to keep your score healthy is to pay your bills on time.
MarketWatch recently asked several financial planners for their thoughts on the "most fruitful personal finance moves" people could make. Many of the usual suspects made the list: increase retirement savings, don't go too crazy with holiday spending. But one suggestion stood out from all the rest: "Buy a really nice gift for your spouse."
Matt's View
After reading lots of lists of recommended financial resolutions for the New Year, that suggestion lifted the glaze right off my eyes. And I agree with it wholeheartedly. After all, the best reason to manage money wisely is to make a difference in the lives of those we love.
Just keep in mind that "a really nice gift" doesn't have to have four wheels or fit around a finger. Maybe the nicest gift for your marriage would be to get out of debt once and for all. Then again, maybe it would be the "investment" of bringing home flowers once a month. Of course, this doesn't just apply to married people. Maybe the best gift you could buy your parents is an unexpected present unrelated to any holiday or anniversary--something just to celebrate them and thank them for all that they've done for you.
What came to your mind as you read this? What's one way you could invest in a relationship that really matters to you in the New Year? Please send me a note
and let me know what you came up with.
With goal setting on so many people's minds this time of year, Money Magazine recently reviewed the tried and true methods for goal accomplishment. First, make a plan. Write your goals down, break them into manageable parts, and put the list somewhere where you'll see it on a regular basis--not in the drawer where last year's resolutions have been gathering dust for the last 12 months. Second, automate. That goes for building savings (automatic deposit) and for paying bills on time (automatic payment). Last, have someone hold you accountable.
Matt's View
While setting goals is a good thing, too much of some good things can be, well, not such a good thing. To improve your odds of success, keep your list short. In fact, think of one thing you could do in 2007 that would improve your financial situation. And then think of someone you know who's already accomplished that goal and ask him or her to be your accountability partner.
The Wall Street Journal recently asked several happiness researchers what changes they've made in their own lives to boost happiness. University of California professor David Schkade tries to "combat adaptation" by celebrating more often. "If you save all your celebrations for getting married or becoming vice president, you won't celebrate very much," he noted. Princeton University professor Alan Krueger invests in memories, like taking his father to the Super Bowl one year. "I got a lot of mileage out of that," he says. "I had the anticipation of the game, as well as the game itself. I framed my ticket, which reminds me of the trip."
Matt's View
Gee, no one mentioned working longer hours or making more money. What an odd bunch these happiness researchers seem to be!
Here's wishing you an oddly happy New Year.
