5 Financial Goals for the New Year

The holiday cards have been taken down and the tree’s been hauled away. 2011 is marching on the way time

The holiday cards have been taken down and the tree’s been hauled away. 2011 is marching on the way time always does, and yet, if you’re like me, you still haven’t done anything about those darned resolutions. If (like me) you put “Become Financially Responsible” high on your list, here are a few tips to give you that much-needed kick in the money-saving pants…

1. Set Your Goals

Are you paying off school loans? Saving up to buy a house? Worrying about your kids’ college tuition? Whatever your financial concerns, start the year off with a plan. Figure out how much you’ll need to save each month to achieve your goals and then really commit to saving that amount.

2. Create a Budget

You can’t pay off debt or save up for your dream house without knowing how much you spend and what you spend it on. A quick web search will turn up numerous free online budgeting tools (my favorites are from mint.com and realsimple.com). Choose the one that suits your style of financial record keeping and dig out those 2010 receipts. Seeing exactly where your hard-earned money goes each month will reveal where you can cut the fat and how much you can safely stow away in savings.

3. Get Out of Debt

Start by paying off debt with the highest interest rates, such as credit card and non-tax-deductible debt, and work your way down from there. Look into consolidating your debt at a lower or fixed interest rate.

4. Start Saving for a Rainy Day Today

For some of us, the recession brought that proverbial “rainy day” a lot sooner than we imagined, and there’s not much left over to save. Still, saving even a little is better than saving nothing at all. Commit to putting away something every month and increase that amount as your finances improve.

5. Increase Your Retirement Savings

Investing in your 401K is a no-brainer. The money comes out of your check before you can miss it, and many companies match a percentage of your contribution. Financial analysts recommend contributing at least the maximum amount your employer will match, and, if you can afford it, the max the company will allow. If you don’t have a corporate retirement plan, set up an IRA and have your contributions deducted automatically from your checking account each month.

Need even more financial goal-setting inspiration?  Find more money saving resolutions at mint.com and realsimple.com.

Originally Published in Reader's Digest

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