Wednesday, January 2, 2013

Personal financial resolutions to consider for 2013


Eating less and exercising more always make for good New Year's resolutions.  But more people are considering starting 2013 with steps that will help get their finances in shape.
A recent survey by Fidelity Investments found that 46% of consumers are considering making financial resolutions for 2013, up from about one-third of individuals just three years ago.  The trend reflects the still-fragile state of the economy and a desire to better prepare for the future or important life events.
Of course, keeping resolutions is never easy.  But among those individuals who set financial goals in 2012, almost half --46%-- said they achieved more than 80% of their resolutions.
Despite this evidence of success, 38 percent of respondents to the Fidelity New Year Financial Resolutions Study thought it's harder to keep financial resolutions than non-financial ones. But that has not kept them from trying. The top three New Year financial resolutions are to: (1) save more (52 percent); (2) spend less (19 percent); and (3) pay off debt (19 percent).

While debt burdens have dropped dramatically over the past five years. U.S. households spent 10.6 percent of their after-tax income on debt payments in the third quarter of this year, the lowest level since 1983, according to the Federal Reserve.  
It's still amazing how few Americans have adequate savings cushions to guard against unforeseen events. The general recommendation is to hold 6 to 12 months of living expenses in cash or cash equivalent accounts. Considering that the average duration of unemployment is still running about 40 weeks, this level of savings should allow you to ride out many a financial storm without raiding your retirement assets.  
If you have these three goals covered, the next three should include areas that are usually given short-shrift in the hierarchy of planning: tracking your expenses; drafting/updating wills and other estate documents; and reviewing insurance coverage (life, disability, long-term care and property and casualty). These are not sexy topics, like investing can be, but without them, your financial security could be at risk.
Consider these goals as ways to improve your financial health and make 2013 a happier one!

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