Financial Resolutions for the New Year

December 30, 2009

Spend less. Save More. Make a budget. These fiscal pledges to do better are popular because most people realize that they can help improve their financial well being. But there are also some less common resolutions that you should consider.

Quit smoking. Lose weight. Get more exercise. These hardy perennials among New Years resolutions are popular because people know that following them will make them healthier. They have their counterparts in the financial arena. Spend less. Save More. Make a budget. These fiscal pledges to do better are also popular because most people realize that they can help improve their financial well being. But there are also some less common resolutions that you should consider. Here’s a sampling.

Review your insurance coverage. Take a look at all your policies—auto, home, health, life–to make sure they still reflect your current circumstances. Life changes–birth, death, divorce, marriage, or children getting older and moving out–can dictate changes in your coverage. While you’re at it, vow to put those policies in a safe place, like a fireproof lockbox in your home or a safe deposit box at your bank, along with other important papers like passports and the deed to your home. Tip: Do not put your will or power of attorney in a safe deposit box. Your executor will need these documents to get access to the safe deposit box. Next up, simplify your financial life. If you own mutual funds from several different fund companies, think about transferring your money to a single family of funds to cut down on excess paperwork.

When it comes to saving more, put your savings program on autopilot. Talk to your bank about setting up an automatic transfer from your checking account to a savings account, so that your savings can grow relatively painlessly. To do the same with mutual funds, check out Morningstar.com to find mutual funds that come with a low initial investment minimum and that will let you invest a monthly amount into the fund of your choice.