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Financial resolutions for the new year

Posted January 22, 2014 in Advice Column, Bondurant

About 45 percent of Americans usually make New Year’s resolutions, according to a survey from the University of Scranton. But the same survey shows that only 8 percent of us actually keep our resolutions. Perhaps this low success rate isn’t such a tragedy when our resolutions involve things like losing a little weight or learning a foreign language. But when we make financial resolutions — resolutions that, if achieved, could significantly help us in our pursuit of our important long-term goals — it’s clearly worthwhile to make every effort to follow through.

So, what sorts of financial resolutions might you consider? Here are a few possibilities:

• Boost your contributions to your retirement plans. Each year, try to put in a little more to your IRA and your 401(k) or other employer-sponsored retirement plans. These tax-advantaged accounts are good options for your retirement savings strategy.

• Reduce your debts. It’s not always easy to reduce your debts, but make it a goal to finish 2014 with a smaller debt load than you had going into the new year. The lower your monthly debt payments, the more money you’ll have to invest for retirement, college for your children (or grandchildren) and other important objectives.

• Build your emergency fund. Work on building an “emergency fund” containing six to 12 months’ worth of living expenses, with the money held in a liquid account that offers a high degree of preservation of principal.

• Plan for your protection needs. If you don’t already have the proper amounts of life and disability insurance in place, put it on your “To Do” list for 2014. Also, if you haven’t taken steps to protect yourself from the considerable costs of long-term care, such as an extended nursing home stay, consult with your financial professional, who can suggest the appropriate protection or investment vehicles.

• Don’t overreact to market volatility. Too many people head to the investment “sidelines” during market downturns. But if you’re not invested, then you miss any potential market gains — and the biggest gains are often realized at the early stages of the rally.

• Focus on the long term. You can probably check your investment balance online, which means you can do it every day, or even several times a day — but should you? If you’re following a strategy that’s appropriate for your needs, goals, risk tolerance and time horizon, you’re already doing what you should be doing in the long run.

Do whatever you can to turn these New Year’s resolutions into realities. Your efforts could pay off well beyond 2014.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

Information provided by Adam Kline, Edward Jones, 107 Second St. S.E., Altoona, 515-967-7644.





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