Financial Resolve: Start out the New Year on firmer footing by making these 3 resolutions.

Financial Resolve: Start out the New Year on firmer footing by making these 3 resolutions.

With the holiday season behind us, we can begin to think about what lies ahead.  As we ring in the New Year, we create resolutions with the best of intentions.  The New Year 2014 brings us a new chance to make the changes we want to see in our lives.
Although money can’t buy happiness, having a grasp on your financial situation can make for a much smoother and more confident daily life.  If you have room on your list for any more New Year aspirations, there are three financial resolutions for 2014 that you really should keep.

1.     Track your spending
Tracking your spending is the foundation for many other financial goals, including making a budget, controlling debt, implementing a savings plan, and the list goes on and on.  You must walk before you can run, and it is important that you have a good understanding of how much you spend and how you spend it.
There’s no time like the New Year to start fresh and build this foundation upon which a plan can be assembled.

2.     Pay down your debt
Specifically, pay down your “bad” debt.  While you may be enjoying the tax deductibility and low interest rates of your mortgage or student loans, there are some types of debt that you don’t want to keep longer than absolutely necessary.
Credit cards typically have high interest rates, and the interest you pay on what you borrow is not tax deductible.  If you have multiple credit cards, your repayment plan should start paying off the card with the highest interest rate.
In addition, talk to your financial professional about any debt consolidation options that may be to your advantage.  This could be in the form of a personal loan, refinance or home equity loan, credit card transfers, and more.
Tracking your spending and paying down your debt are two resolutions you don’t want to put off for another year.  Why?  The sooner you start chipping away at these goals, the better.  If you get your finances in order now, you will have more time to grow your nest egg and take advantage of the compounded interest.  Compound interest is the concept of earning interest not just on your original investment, but also earning interest on interest by letting those earnings “compound.”  If you save $1 every day for 30 years at 7% and you let the interest accumulate and compound, your $1 a day will turn into approximately $36,890.  That is the power of compound interest.

3.     Review your estate plan
Essentially, estate planning is the process of planning the distribution of your estate, and it is an important part of any financial plan.  There are many tools that can be used in estate planning, such as wills, trusts, beneficiary designations, life insurance, and gifting.  This can be a complex process, and you should consult your financial planner and estate planning attorney to help you navigate the terrain.
Why is estate planning important? And why is it important enough to add to our list of New Year’s Resolutions?  Tomorrow is never promised, and you are not too young or too old to start thinking about getting your affairs in order.  The benefit you provide to your family by having an estate plan in place is incredibly impactful.  Having a plan in place can prevent family disputes, minimize taxes, and give you peace of mind in knowing and understanding what your death or incapacity might mean financially for your loved ones.
Perhaps the most important New Year’s resolution you can make, however, is to take ownership of your finances.  You should not feel shy or embarrassed to openly seek help and discuss your financial situation.  Just remember that everyone has the same amount. You have 100% of what you have, regardless of what dollar amount that represents, and now is the time to get on the right track.

Wherever 2014 takes you, whatever your goals may be, let the motivational and rejuvenating spirit of the New Year empower you to make positive and lasting changes in your life.

Alison Bach is a CERTIFIED FINANCIAL PLANNER™ for Conte Wealth Advisors in Camp Hill, PA.  Registered Representative, Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Cambridge and Conte Wealth Advisors, LLC are not affiliated.