Losing
weight and quitting cigarettes may make way at the top of resolution
lists this year. An annual survey from the National Endowment for
Financial Education® (NEFE®) finds more than two thirds (68 percent) of
U.S. adults will make a financial New Year’s resolution for 2017, a sign
that the majority of Americans remain focused on their financial health
as much as their physical health. But regretfully the survey also finds
that one in three (31 percent) rate the current quality of their
financial life as worse than they expect it to be. The survey was
conducted online in December 2016 by Harris Poll on behalf of NEFE,
among more than 2,000 U.S. adults.
“We have to stop looking at unexpected events as not if they will happen, but when
they will happen. Everyone should have an emergency savings and it
should be used for its intended purpose,” says Paul Golden, spokesperson
for NEFE. “Ideally you want to build up to the benchmark of six to nine
months of your annual salary in savings, but for many this amount seems
unrealistic. Start with a small, achievable goal like $500 dollars,
then set the bar higher.”
As with any resolution,
unrealistic and unreasonable goals are soon forgotten before January
comes to an end. With financial resolutions, a buddy can help. A past
NEFE study found 85 percent believe having someone who understands their
financial goals and can assist in holding them accountable would be
helpful.
“Your financial buddy can
be anyone: a spouse, a trusted friend, a family member or a co-worker,
and it doesn’t have to be someone with whom you share all of your
financial information,” says Golden. “The greatest characteristics of a
financial buddy will be someone who shares the same values and vision
and someone who can bring perspective to the financial highs and lows
that you experience.”
1) Get debt under control.
Take a hard look at what you owe. If there’s a clear warning sign of
too much debt, take action. Set a goal to reduce your debt load next
year by 5 to 10 percent. That might mean reducing impulse shopping. Six
in 10 people admit they purchase on impulse and 80 percent of those
regret purchases afterwards. When you face temptation, walk away for at
least 30 minutes and see if you still want it and it’s a good idea.
2) Start saving now and do so often.
We don’t yet know what an alternative to the health care system would
look like. But what’s certain is that costs continue to climb, premiums
are more expensive and copays are rising. Assume medical emergencies are
not a question of if they will happen, but when. Emergency savings can
offset unexpected costs. Common advice tells us we should have six to
nine months of income set aside. Again, set a goal—start with as little
as $500. Of course more is better, but by starting small you gain a
sense of security, a sense of goal achievement, and you reduce stress.
And we know the rules of retirement have changed. Review your long-term
savings and ensure they are appropriate and on target.
3) Shop for better services.
Where can you come up with $500 for an emergency fund? Make a game out
of shopping providers to find the best value in the services you use.
How long has it been since you shopped your insurance policies? Any
chance you can save money on your cell phone plan, internet or
utilities? Go to your current providers and ask “what’s the best deal?”
Also, be sure to understand your policy and services so that you are
comparing apples to apples.
4) Understand what’s behind your financial decisions. Ever
wonder why you feel good about spending money on vacations, but avoid
saving for retirement? Why you buy new golf clubs, but procrastinate
when it comes to giving your kids an allowance? The answer may lie in
your unique LifeValues and how they influence your financial decision
making. Take the LifeValues Quiz.
For help with setting goals and getting finances in order in 2017, visit www.smartaboutmoney.org for resources, tips and self-directed courses.
Survey Methodology
The survey was
conducted online within the U.S. by Harris Poll on behalf of the
National Endowment for Financial Education from December 16-20, 2016,
among 2,088 U.S. adults aged 18 and older. Data were weighted using
propensity score weighting to be representative of the total U.S. adult
population on the basis of region, age within gender, education,
household income, race/ethnicity, and propensity to be online. This
online survey is not based on a probability sample and therefore no
estimate of theoretical sampling error can be calculated. For complete
survey methodology, including weighting variables, contact pdg@nefe.org.
About the National Endowment for Financial Education
NEFE is an independent
nonprofit organization committed to educating Americans about personal
finance and empowering them to make positive and sound decisions to
reach financial goals. For more information, visit www.nefe.org.
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