Along with a fresh start, the New Year brings uncertainty
about changing tax laws, growing concern over online privacy and security, and
challenges for almost every demographic group--even the wealthy, who face steep
tax increases. To help you get ready to tackle your own money goals for 2013,
we gathered our best advice from the past 12 months and organized it into 50
bite-size steps:
1. Be a year-round discount shopper
Specific holidays used to loom large in the world of coupon
hunters, who expected to see massive discounts on July Fourth, Labor Day, Black
Friday, and other big shopping days. But recently, that's been shifting as
retailers are offering sales all year long, and often at unexpected times. In
2012, for example, retail experts noted that Christmas sales started in
October, and continued all season, partly in response to customer demand. That
means shoppers should always be on the lookout for the best deals, regardless
of the calendar date
2. Ask for what you want
As the economy recovers, retailers are eager to pick up the
biggest share of consumers' spending what they can, and in some cases, that
means adopting more flexible pricing policies. Towards the end of 2012, several
big-box stores, including Target and Best Buy, launched temporary
price-matching policies. That trend could continue into 2013, which means
customers can be more assertive about asking stores to match prices they find
elsewhere
3. Coordinate budgeting with your partner
Much stress can come from disagreeing with your spouse or
partner about how you should be spending shared income. Indeed, in author and
yoga teacher JoAnneh Nagler's case, it even contributed to divorce. But she and
her husband were able to reconcile (and remarry) when they jointly agreed to a disciplined
debt-free lifestyle. By scaling back on restaurant meals and other splurges,
they're able to invest in what they really value, including their creative
pursuits and romantic weekend getaways
4. Pay off debt slowly
When you've built up a sizable amount of debt, it's
virtually impossible to pay it off overnight, and attempting such a feat can be
frustrating. That's why Nagler, who had $80,000 in credit card debt at one
point, urges fellow debt-strugglers to go slowly. First, she changed her spending
habits and set up individual savings accounts for each of her goals. Once she
got those costs under control, she started paying off her debt
5. Prepare for tax changes
Tax rates are likely to rise for many Americans next year,
especially high-earning ones. To lessen the stress from those changes,
taxpayers should adjust their spending and saving habits as early as possible
to prepare to hand over more cash to Uncle Sam. Taking advantage of any credits
and deductions, as well as putting more money into tax-advantaged retirement
accounts, can help ease the impact
6. Calculate your retirement number
Just 1 in 10 Americans have done the math to figure out how
much they need to save for retirement, but it's an essential step in making
sure there's enough cash for those much-deserved golden years. Financial
advisers generally recommend saving enough to replace 80 percent or more of
your income; that means someone who earns $80,000 should probably save around
$2.1 million. Online retirement calculators can crunch the numbers for you
7. Make better retirement choices
Paying high fees, choosing portfolios that are overly
conservative (or overly risky), and failing to update or even check on those
investments on a regular basis are just a few of the common mistakes people
make with their retirement accounts. To avoid missteps, employees can often
rely on free services offered through their company's human resources
department or retirement services provider. Fidelity, for example, offers free
seminars and online information to clients
8. Save a quarter of your income
Alicia Munnell, director of Boston College's Center for
Retirement Research, cautions that putting aside 9 percent of your income into
a retirement account is "grossly inadequate." Someone who starts
saving at age 35, plans to retire at age 67, and expects a 4 percent return,
for example, needs to save double that, even after taking Social Security into
account. Other financial experts recommend saving as much as one-quarter of
your income, in both retirement and after-tax accounts, to make sure you're
fully covered
9. Make it automatic
If manually shifting money into savings and investment
accounts is too time-consuming or too painful, consider setting up automatic
deposits. Many banks make it easy for customers to do that, and, in fact, might
even offer rewards for doing so. Wells Fargo, for example, waives monthly
service fees on some of its accounts when customers set up recurring automatic
transfers
10. Leverage your credit card
If you pay off your credit card bill each month and earn
rewards for your spending, don't forget to cash in on them. The biggest
bang-for-buck often comes from purchasing retailer-specific gift cards, which
have been pre-negotiated by card companies. Farnoosh Torabi, financial expert
and television personality, recently picked up an Apple Macbook Air with her
points, which she also uses to buy gift cards for family members.
11. Find your perfect piece of plastic
If your credit card isn't meeting all your needs, it might
be time to find one that does. Comparison websites such as nerdwallet.com,
indexcreditcards.com, and creditcards.com make it easy to compare the benefits
of different cards to figure out which one suits your needs. If you carry any
sort of balance, there's only one factor to focus on: finding the lowest
interest rate
12. Upgrade your bank
Bank policies can vary widely, from offering above-average
interest rates on savings accounts to making it easy to budget online with
extra tools. Consider your own lifestyle and then find the bank that best
matches it. If you travel a lot, you probably want a large bank with thousands
of ATMs throughout the country (and beyond). If you're trying to save more,
then you might want to focus on the savings rates
13. Demand more from the one you have
Customers are increasingly voting with their feet and
switching banks when they're not happy with their current one. That also means
customers have more leverage to ask for the changes they want from their
current bank, as banks struggle to retain loyal customers. If you want lower
fees or a higher interest rate on your savings account, ask your bank what they
can do for you--they might be able to offer you a better deal than the one
you're currently getting
14. Consider a credit union
Frustration with banks' policies, such as new fees, has
motivated thousands of customers to jump ship and join credit unions, according
to the Credit Union National Association. It can be a good decision, especially
considering that credit unions often offer higher interest rates on savings
accounts as well as lower fees and lower rates on auto loans and mortgages.
They also prioritize spreading financial literacy to their customers
15. Get a raise
Just because the economy's struggling to make its big
comeback doesn't mean you have to delay asking for a raise. Certified financial
planner Lauren Lyons Cole suggests first checking out salary-comparison sites,
such as Payscale.com and Salary.com, to see if your own income is out of whack
with that of your peers. If it's lower than it should be, review your
accomplishments and present them to your boss, along with a request for a raise
16. Earn more money on the side
The lack of job security these days has inspired many
Americans to pick up a second stream of income by moonlighting. According to
the website Payscale.com, the highest-paid moonlighting gigs are in law,
clinical psychology, senior copywriting, and information technology security.
Freelance website Elance.com predicts that the trend toward freelancing,
especially in the creative-services sector of the economy, will only grow
throughout 2013
17. Manage your time better
When people juggle more than one job, they can quickly feel
overwhelmed with responsibilities. Veteran job-jugglers say they survive by
staying organized, waking up early, and avoiding time-wastes such as television.
Many also work on the weekends and some even take a sabbatical from their day
jobs to focus exclusively on their second job for a few months
18. Take advantage of your HR department
When you land a new job, the human resources department can
help you sign up for all of the new benefits, from flex spending accounts to
health insurance to retirement accounts. Signing up for retirement benefits as
soon as possible can pay off later: The earlier you start putting money away,
the sooner it can start growing. TD Ameritrade calculates that saving $100 a
month between ages 21 and 41 will create a nest egg of $471,358 by age 67,
assuming a return of 8 percent per year. Waiting until age 41, however, will
generate just under $60,000
19. Prepare to earn less after 40
If you want more motivation to ramp up that side income in
2013, here it is: In most professions, income stops rising around age 40.
Payscale.com reports that in many professions, you earn quickly in your
twenties and thirties as you become more valuable. Then around mid-career, you
plateau, and as a result, salary increases slow down. (Certain careers,
including those in law and high-tech, are exceptions.) One way to make up for
that loss is to earn more money outside your full-time job
20. Burnish your entrepreneurial skills
According to a survey by Generation Y research and
consulting firm Millennial Branding, 1 in 3 employers want their employees to
have entrepreneurial experience. Knowing how to conceive, build, and promote a
business idea is increasingly valuable in the new economy, even for those
seeking more traditional jobs.
21. Learn to cook
Replacing take-out and restaurant meals with home-cooked
goodness can save you hundreds of dollars throughout the year. If you feel
hesitant in the kitchen, a few hours with the Food Network or browsing foodie
blogs will help get you in the mood. Investments in certain tools, such as
cookbooks, immersion blenders, or quality pots and pans can also make the
kitchen more enticing after a long day
22. Invest in your home entertainment system
If you're a movie buff, you have a lot of new choices that
are cheaper than seeing movies in the theater. Hulu Plus, Apple TV, and Roku
are among your relatively affordable options, especially when you consider how
much you'll save by skipping weekly trips to the theater
23. Focus on home improvements that pay off
Leaky windows and attics can drive up heating bills in the
winter and cooling bills in the summer. Consider investing in insulation as
well as a programmable thermostat, which can cut energy costs by 30 percent
over the year. Smart power strips, which cut power to electronics when they're
off, can also help reduce electricity costs. LED lights are another smart
option
24. Give better gifts
Do you know what people really want for holidays and their
birthdays? Money or gift cards. It might sound impersonal, but a survey by
Discover found that such fungible items top wish lists for both men and women.
In fact, the National Retail Federation went so far as to name gift cards as
the hottest gift of 2012, because they've grown so much in popularity. The fact
that fewer cards come with fees and many offer extra loss protection has also
contributed to that trend
25. Get to know the holes in your homeowners' insurance
policy
The worst time to discover that your homeowners' insurance
policy doesn't include reimbursement for water damage is right after a flood.
Yet many homeowners don't understand the ins and outs of their policies, which
can lead to nasty surprises. In fact, most standard policies don't cover
earthquake damage, flood damage, or water damage from sump pump backups.
(Homeowners have the option of adding supplemental coverage to handle these
scenarios.)
26. Protect your online identity
The past 12 months have seen a series of high-profile
security breaches, including at Zappos and Barnes & Noble. To make sure
you're as protected as possible, consider changing your passwords regularly,
reviewing bank account statements each month to check for errors, and being
especially wary of hyperlinks to deals promoted over social networking sites.
Hyperlinks embedded within emails should also be treated with suspicion
27. Stop before you shop
When you're surrounded by advertisements and material
temptations, it's easy to buy without thinking. But one organization, Jews
United for Justice, urges people to first ask themselves a series of questions
about the purchase. The questions include: "Is this something I
need?" "Can I borrow, find one used, or make one instead of buying
new?" and "Will this purchase enhance the meaning and joy in my life?"
The group distributes credit card sleeves with the questions to encourage more
thoughtful spending habits
28. Ignore official-looking (but dubious) solicitations
It's one of the most common scams around: A company poses as
an official government agency in order to solicit your attention (and funds).
It might send out mail that's covered in intimidating warnings, such as
"$2,000 fine, 5 years imprisonment, or both for any personal interfering
or obstructing with delivery of this letter." But they're really just
trying to sell you something you probably don't need. The Federal Trade
Commission calls the practice outrageous and says it's illegal to falsely
suggest something bad will happen unless the recipient asks quickly. The bottom
line: Ignore such solicitations
29. Donate for free
You don't have to be rich to be charitable. Consider
donating your blood, gently used books and CDs, and your time this year. For
extra power, get together with friends to form a giving circle, so you can
leverage your dollars and give to causes together
30. Learn how to talk about money with your kids
Parents are famously awkward when it comes to talking about
money. A T. Rowe Price survey found that just half of parents talk to their
kids about savings goals and spending and savings trade-offs, and even fewer
discuss higher-level concepts such as inflation and investing. But research
routinely suggests that parents play a powerful role in how kids handle money
as adults, so if you have children, try to get over your awkwardness to share
some important life lessons this year.
31. Protect your money from your children
Baby boomers have been generous toward their adult children,
inviting them to move back home and offering them direct financial support. But
often, that kind of generosity hurts parents' own retirement nest egg. In fact,
even the parents of two Olympic gold medalists, Gabby Douglas and Ryan Lochte,
revealed major financial troubles of their own. Before putting their own
financial security at risk, parents should consider whether they can really
afford the help they're offering
32. Use technology to ease those conversations
If you're struggling to explain the concept of limits to
your children, there's an app that can help: "Can I Buy?" designed by
the husband-and-wife team behind the Massachusetts-based developer Sqube. After
crunching some numbers for you, the app tells you whether or not you can afford
that purchase that you're considering. The creators themselves got the idea
when they were trying to explain to their young daughter why she could not buy
a new toy
33. Take advantage of other new online money tools
A new website, SmartAsset.com, hit the Web this year, and
it's a useful one: It helps users make complicated personal-finance decisions,
such as whether they should buy or rent, or which mortgage to take out. If
you're looking for some help with number-crunching, the site could be the one
for you. Mint.com is another useful site for budgeting and getting organized
34. Check your Social Security benefits
Since the Social Security Administration stopped sending out
paper statements via snail mail each year, you might be missing your annual
estimate of just how much Social Security income you're likely to receive in
retirement. But there's an easy way to get that information: Visit socialsecurity.gov/mystatement
to see your earnings history and projected future benefits. More than one
million people have already done so
35. Be an alpha consumer
Jon Yates, the official problem-solver at the Chicago
Tribune and author of What's Your Problem? Cut Through Red Tape, Challenge the
System, and Get Your Money Back, says persistence is often the most important
factor when seeking a response from a company. That might include threatening
to take your business elsewhere, or asking to speak to a manager or executive
until you get the answer you want
36. Start a social media account
Airing grievances about specific companies on a blog,
Facebook, or Twitter can also be an effective way of getting their attention.
Just be sure you don't sacrifice your own privacy and security in the process.
Many banks, for example, run active Twitter accounts, but they caution
customers to take specific questions off the public venue and onto a phone line
or email account. Talking over social media, after all, means talking in front
of an audience
37. Pay less for gas
In addition to seeking out the lowest-priced gas station in
town, you can also stretch your gas dollars through more creative means. Those
include lightening your car by unloading any heavy items stored in the trunk,
carpooling, making sure tires are properly inflated, and replacing clogged air
filters. An even safer bet is replacing some of your car time with public
transportation or biking
38. Refinance, or not
When interest rates are low, refinancing to lock in a lower
rate on your mortgage is tempting. But doing so also comes with costs,
including closing costs and your own time. (Completing the paperwork can take
hours.) Before jumping on the refinancing bandwagon, crunch some numbers with
an online refinance calculator to help you figure out if it will really save
you money
39. Improve your credit score
Credit scores can hold a lot of power over your life; they
influence your loan rates and the ability to rent apartments, and they can even
play a role on job applications. According to money expert Liz Weston, author
of Your Credit Score, the most important steps you can take to improve your
score include removing any errors and making regular, on-time payments to all
revolving accounts, including credit cards. Paying down debt helps, too
40. Get your credit report
You're entitled to a free credit report every year, which
you can access through annualcreditreport.com. Reviewing it regularly makes it
possible to check for (and correct) any mistakes, as well as catch potential
problems, such as identity theft, before they escalate. The Consumer Financial
Protection Bureau also announced this year that it will start supervising the
credit bureaus as part of an attempt to make the world of credit scores and
credit reports more transparent to consumers.
41. Learn patience
Research co-authored by Columbia Business School professor
Stephan Meier found that impatient people tend to have lower credit scores,
which means they pay more for loans. Study participants who were most willing
to wait for their cash rewards had, on average, scores that were 30 points higher
than those who were the least patient. The suggestion? Learning to wait for
rewards can pay off in the form of lower loan rates
42. Check your insurance policies
According to MetLife, just 3 in 4 married couples with young
children have life insurance. That means 1 in 4 do not. Given the high cost of
raising children (the Agriculture Department estimates $234,900 per child
before age 18), that leaves families in a vulnerable position if one or both
parents were to die. While there's some hassle involved, the cost of taking out
life insurance is relatively low (a half-million dollar policy on a healthy
35-year-old might be one dollar a day, says MetLife), so consider signing up if
you haven't already
43. Organize your financial paperwork
When Superstorm Sandy hit in 2012, thousands of people on
the East Coast had to quickly leave their homes. If your paperwork is in order,
it will be easy to know what to grab if you suddenly have to do the same thing.
Essential papers to carry with you include identification, insurance
information, and family documents, such as birth and marriage certificates and
wills
44. Create photographic evidence
Just in case you ever have to file an insurance claim, take
photos of your most valuable possessions, including furniture, jewelry, and
televisions. Creating a paper trail of those goods, any damage they sustained,
and subsequent claim filings can make it easier to follow up with the insurance
company and collect reimbursements
45. Prepare for emergencies
In the spirit of always being ready, consider coming up with
a plan for an alternative place for your family to stay in an evacuation
scenario. When the power goes out, it's harder to find the closest available
hotel, or to talk to friends about staying with them. It's also a good idea to
get an emergency kit together, so if you have to hunker down in your basement
for a few days without power or running water, you know you could survive. The
kit should include batteries, flashlights, water, changes of clothes, cash,
non-perishable food, and a first-aid kit
46. Beef up your emergency savings account
No matter how prepared you are, emergencies can end up
costing a lot of money. Consider funding an emergency savings account that
could cover you in the event of weather disasters, car breakdowns, and other
unexpected calamities. Financial advisers generally recommend putting away
three to six months' worth of expenses
47. Plan to work well past retirement age
Older Americans are increasingly working into their 70s, for
financial as well as psychological reasons. In other words, many of them enjoy
their work. A Charles Schwab survey found that one in three 60-something
middle-income workers don't want to retire. To prepare for a long career beyond
age 65, career experts recommend making sure you're doing work you love. That
might mean launching a second career, unrelated to your primary one
48. Change your habits
In his book The Power of Habit, New York Times reporter
Charles Duhigg explains how we can change our habits by focusing on the cue and
reward. If you want to start exercising every day, for example, "cue"
it up by putting on your running shoes before breakfast, and then reward
yourself afterward with a piece of chocolate. Eventually, the new habit will
become a natural part of your day
49. Check out your older self
Here's an easy way to motivate yourself to commit to big
changes in 2013: Focus on your future self. Research by Hal Hershfield,
assistant professor of marketing at New York University's Stern School of
Business, has found that showing people aged photos of themselves makes them
more likely to put money away for later. You can get in touch with your future
self by writing a letter or even downloading an aging app, such as AgingBooth,
for a sense of what you'll look like in 30 years. Spending more time with your
grandparents can also help
50. Think about where you want to be (financially) in a year
When you're brainstorming for your big money goals for the
year, try to focus on specific steps, instead of big, overwhelming dreams. For
example, if you want to build financial security, goals might include spending
less on food or developing a second stream of income. BJ Fogg, director of
Stanford's Persuasive Technology Lab, suggests breaking big goals into small
baby steps
Here's to a prosperous 2013!
Source: http://in.finance.yahoo.com/news/50-ways-improve-finances-2013-155537722.html?page=all
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