How to Keep Your New Year’s Resolutions

Every year most of us resolve to improve our lives. But now that it’s nearly mid-January those grand promises have faded like the New Year’s Eve hangover.

Eleanor Blayney, a certified financial planner and Consumer Advocate for Certified Financial Planner Board of Standards has a solution for making sure financial to-do lists get done in 2011.

Quite simply, though you just barely got going, start over and keep it simple. The usual financial resolutions can be given new life as smaller and more attainable “Re-Solutions” for 2011.

Here’s how.

“The key to keeping financial New Year’s resolutions is to apply the principle of little and often,” says Blayney. “Grandiose goals need to be whittled down into goals with specific, actionable steps, and there must be a commitment to updating these new goals frequently,” she adds.

Live within your means

Turn this goal into a reachable action by committing to avoid all overdraft and late fees in 2011. Keeping monthly tabs on current account balances and credit card payment dates is an easy, simple way to avoid these fees, says Blayney.

Get out of debt

Breaking this into baby-steps can change this resolution into an enormous financial achievement. Start by paying off more than required on credit cards, auto loans and mortgage – even if it is only a few dollars. Use auto-pay systems to make regular extra payments, and increase the amount of the payments at regular intervals. Once the auto-transfers are set up, the goal will begin to take care of itself, assures Blayney.

Save more

Here is another resolution that is best accomplished a bit at a time. For working Americans, there is no excuse for not having money to save this year, thanks to a recent tax change. Starting with the first paychecks in 2011, the amount of employee contribution to Social Security will go down by two percent, giving most people a slight increase in their take-home pay (at $50,000 gross wages paid every two weeks, it will amount to about $38 per paycheck). Have this money automatically put into a money market account. After a year, the account will accumulate to around $1,000 says Blayney, which can be invested or used as an emergency fund.

Prepare a will

This is a perennial “must do” for many, but one that is rarely kept. “There seem to be many ‘what ifs’ that people often feel overwhelmed,” she says. By applying the “little and often” rule, this important task can be broken down and completed. First, understand that estate planning is not a one-time event, but a lifelong process. Wills, trusts and beneficiary designations will need to be reviewed and adjusted to changing life circumstances every few years. Second, when creating an estate plan, forget about the “what ifs” and keep the focus narrow. The only question, says Blayney, that needs to be answered is: “If I died today, how should my affairs be handled?”

“Financial resolutions are meant to be kept, and not necessarily checked off and discarded. If you see them as guiding principles, rather than discrete accomplishments, they become more of a one-time goal, but a prudent way of life. And that is something we should all resolve to do.”

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