Financial Resolutions for the New Year
A Practical Guide to Putting Your Life on Track for Success

The New Year is a great time to overhaul your financial life.

Excerpts from

By: Joshua Kennon

The New Year is a great time to overhaul your life for the better, and one excellent place to start is by making solid financial resolutions that can help get you closer to your money goals, whether it's increasing your retirement savings or setting enough money aside for a down payment on a house. Here are a few you might consider adding to your own personal agenda:

1. Know What You Want

Have a clear, concise financial goal for the year.

It isn’t good enough to say, “I want to have my credit card paid down and more money in the bank.” Instead, you should write a financial resolution that is clear and actionable like, “I have the balance on my credit card paid down to $0, over $5,000 in my savings account, and a fully funded IRA .”

2. Prioritize Your Debts

Not all debt is equal. Make a list of your liabilities and organize them by the annual interest rate . Those with the highest rates (most likely your credit card debt ) should be paid off immediately. It does no good to invest money while you are paying 19 percent or more in interest each year.

3. Open an Individual Retirement Account (IRA)

If you haven't done so already, open an individual retirement account and start making contributions to it . Your financial planner or accountant should be able to tell you whether a Traditional or Roth IRA is better for you. Both offer important tax advantages that can add up to a significant amount money by retirement.

4. Add to your Savings Account automatically

If your financial resolution was to save more money, have a set amount of money automatically transferred each month (or more often) into your Plumas Bank Savings Account and earn interest. This automated savings plan forces you to follow through because the cash is drawn directly from your checking to your savings before you can get your hands on it.

5. Make Money Doing What You Love

Most people can name at least one thing they are truly passionate about.

One of the ways to enjoy your work is to only do the things you enjoy. Find a way to turn your passions and hobbies into profit.

6. Collect Your Change

Any time you pay for things with cash, only spend whole dollar amounts. If you go to the grocery store and your purchase total comes to $67.39, pay $70 in cash and pocket the change. The first thing you should do when you go home is to throw the money in a large container (empty water jugs are perfect). Think of it as a piggy bank for adults. If you adhere to this policy and don’t spend any of the change, you are likely to save several thousand dollars over the course of a year. Use the money to pay down debt , or go on vacation.

7. Give Money

One of the most effective ways to realize the value of money is to give it to someone else. The next time you get your paycheck, take 5 percent of your salary in cash (the greenbacks in your pocket will make it seem far more real than if you simply wrote a check or used a debit card). Surprise someone and pay for their morning coffee or walk into a Toy Store and pay for a toy of choice for a little girl or boy. It is a powerful and effective way to change other people’s lives for the better while giving you a better sense of freedom financially. Suddenly, you realize just how much promise $20 contains.

8. Read a Financial Book Each Month

If you want to learn to cook, you read cookbooks and spend hours a week in the kitchen. If you want to learn to fix an engine, you ask someone to show you. The printed word is amazing in that it allows you to communicate directly with the most brilliant financial minds of the past century. Consistently committing yourself to learn as much as you can about the financial markets, the nature of money, and investments in general, is absolutely essential to creating long-term wealth .