New Year's resolutions are always about
things, like exercising, quitting smoking, or otherwise changing your basic daily habits to reach a particular goal. That's why resolutions are so quickly abandoned -- because they require change.
But how about resolving to
things this year? That's a process that doesn't involve actually doing anything different, unless you really want to. Just resolving to know shouldn't be so tough.
After all, when you were little you looked under the bed to make sure the bogeyman wasn't waiting to pounce when the lights went out. Back then you
to know, wanted certainty. And there was a good, warm feeling when you realized there were no dangers lurking in the night.
What are you afraid of knowing now? Maybe your resolution this New Year should be to check out those lurking worries -- especially the financial ones. You shouldn't be afraid to take a peek, and I'm going to make it easy!
Know How Much You Owe
Let's start with a simple step, but a huge stumbling block for many people worried about their finances. Figure out how much you owe. Resolve to pile up the credit card bills that will soon start arriving, and open them all at once. Then, simply make a list of the outstanding balance, the minimum monthly payment and the interest rates.
And then you'll know. I'm not going to preach about what you should
. You're smart enough to figure that out. But if you're overwhelmed by those totals, you can get help from Consumer Credit Counseling Services at 800-388-2227.
Know Where Your Money Went
You don't really want to know that either, do you? What are you worried about? Making the same mistakes this year? Here's how to know every penny you're spending this year.
Buy the 2006 version of
Money software, and pop the disc into your computer. I assume you're already paying your bills online, but if you aren't, go to your bank's Web site and sign up. You can regularly download your bill pay information into the money management software with a click of your mouse.
You can categorize the spending you do on your credit card when you download the bill payment. And if you use your debit card instead of cash wherever possible -- dry cleaners, gas station, etc. -- those debits will be downloaded as well. You can give all your spending a category.
Now, peek under the bed: With a click of your mouse all your spending is neatly displayed by category in a pie or bar chart. Now you
where all the money went.
Know if Your 40l(k) is Wisely Invested
You don't actually have to change your investment choices, but wouldn't it be nice to know if you're doing the right things with the money you set aside? Don't bother asking the person sitting at the desk next to you. He doesn't know either. And, after all, each person is different, with different goals and dreams. So how do you know about what choices you should make?
If your company offers a service called Financial Engines, you have the answers at your fingertips. Then service's tool creates a personalized modeling scenario of how you should best structure your investments within the plan to meet your retirement goals. (If your company doesn't offer this service, go to my
Web site and click on the FinancialEngines blue icon on the home page for a free one-year trial.) You don't actually have to change your fund choices, but at least you'll
Know if You Can Ever Retire
This is the biggest bogeyman of all. We think we can't possibly know the answer to that one -- much less save and invest enough to reach that goal. So we huddle under the bedsheets, afraid even to peek into the darkness. Nonsense -- there's a very easy way to
how much you need to retire, and how much you should save every month.
Just go to
ChoosetoSave.org, where there's a handy calculator called the "Ballpark Estimator" that will do the work for you. The Employee Benefit Research Institute has created a personalized, in-depth process to help you know where you stand and what you might want to do to make your dreams come true.
Surely there are a lot of things you could resolve to
in the New Year to change your personal financial future. But you've made those resolutions before, perhaps with little success. So don't feel compelled to take action. Just resolve to peek into the darkness under your personal financial bed.
Just one thing: You have to
That's the first step to change. And that's The Savage Truth.
Terry Savage is an expert on personal finance and also appears as a commentator on national television on issues related to investing and the financial markets. Savage's personal finance column in the Chicago Sun-Times is nationally syndicated, and she released her fourth book,
The Savage Number: How Much Money Do You Need?
in June 2005. Savage was the first woman trader on the Chicago Board Options Exchange and is a registered investment adviser for stocks and futures. A Phi Beta Kappa graduate of the University of Michigan, Savage currently serves as a director of the Chicago Mercantile Exchange Corp. She also has served on the boards of McDonald's and Pennzoil.