The new year is upon us and it marks a chance for us to revise old habits so we can improve our overall state of living. Whether you feel you have been doing well in 2013 or you have turned for the worse, it pays really put some thought into the changes that you will make next year. The improvements for 2014 should have been listed already but if not, you still have a month to think about it.
Of all the improvements, you may want to make a special note of your financial life. You may be wondering why the special focus on your personal finance? The issues involving the national economy and the experiences that we have been through in the past few years should be enough reason to make you want to improve your money management skills. But beyond that, taking care of your finances will help you hit two birds with one stone. You get to ensure that your present and your future will both have a healthy financial condition.
There are many things that you can improve but based on the recent news towards the end of this year, we have three suggestions that you might to include in your new year’s resolution list.
Learn to control your debts to avoid a financial crisis
The first area in your personal finance that deserves attention is your debt. We have gone past asking consumers to stay away from debt. Admittedly, there are debts that you need to make in order to improve your personal financial life. The key to be successful is not to stay away from credit – but to know how to utilize it. If you learn how to be responsible with credit, you do not have to completely eliminate debt from your life to become debt free.
Taking from four data sources: US Census, Survey of Consumer Finances, Aggregate Revolving Consumer Debt Survey and the Household Credit Report from the New York Federal Reserve, Nerdwallet.com serves up some interesting credit statistics.
As of November of 2013, the average credit card debt for every household is steadily declining. Although the overall household debt is rising, it is not to be blamed on credit cards. The blame goes to auto loans and student debt. But for both mortgage and credit card debt, people are getting better in managing them.
If compared to last year, the total debt amount decreased by 3.2%. The site reports that the average consumer has $15,112 worth of credit card debt – at least, if you only consider the homes that have debts. If you include the other households in the average that are not necessarily in debt, the average goes down to $7,050.
Credit cards used to be the most hated debt because of the way it can seriously compromise the personal finance condition of a consumer. But given that people learned how to use it wisely and pay it off on time, it does not seem so bad anymore. So what can be your resolution about the debt in your personal finances?
Budget your credit card purchases. This way, you have the money to pay off the balance in full at the end of the month.
Pay your dues within the grace period. If you pay for your balance immediately, you get to avoid the high finance charges.
Limit your credit card accounts. Having a lot of accounts that you will not use can backfire on you when the temptation of using it gets to be too hard to resist.
Cautious investing to secure your finances
The next personal finance improvement that you may want to work on this 2014 involves your investments. Whether you are young or about to go into retirement, investing is one of the ways that you can achieve security in your life. In fact, it helps satisfy one of the three conditions to have financial security – which is to help you set up more than one source of income.
So what about your investments should you be improving this 2014. Well here’s the thing, the Consumer Confidence Index or CCI is declining and that is an indication that people are not as optimistic about the economy and their personal finance situation. Based on the report published on the Conference-Board.org last November 26, the CCI is still declining in November – after the sharp decline experienced in October. The October decline is said to be caused by the government shutdown and the debt ceiling issues. In November, people are spending more but that could be due to the holiday spending and not entirely because they feel confident about the government.
When it comes to your investments, you need to keep a close eye on the market to see where the trends with go. One of the index that you will look into is the CCI because businesses and retailers take a close watch of this. Consumer spending is what makes the economy rise or fall and the CCI gives you a peek at how spending will be in the next couple of months.
So what does this decline in the consumer confidence have to say about your investments?
Review your portfolio. Evidently, things are not as healthy as we hoped it will be. It is time to take a look at your portfolio to consider the investments that you may have to let go and those that you want to hold on to.
Keep a close eye on the news. Being aware of the market conditions is the best way for you to make smart decisions about any trading investment strategies. Keeping track of issues like the effects of the government shutdown and the debt ceiling (that will headline once more on March 2014) is one of the things that you may want to look into.
Discuss new investment strategies with your broker. If you can get it as part of the service, it is a good idea to try to discuss new strategies with your broker to see where you should invest your money. For sure, they want you to earn because they profit from commissions so you can trust them for help.
Save up for retirement to prepare for the future
The last area in your personal finance life that you may want to work on improving this 2014 is your retirement fund. The IRS announced in October that they will be implementing a few changes regarding the income phase-out range for retirement contributions. In a news release published on the IRS.gov website, the government agency revealed that they will be increasing the phase out range for some retirement contributions. This means more people can get their full tax credit when contributing to their retirement plans.
Given this news, you may want to look into your retirement planning to make your own changes that will be implemented in 2014.
See how much you can increase in your retirement contributions. Now that the range is higher, you can probably grow your retirement fund faster. Check out if you qualify to take advantage of this change.
Check out the Consumer Price Index (CPI). According to the IRS, the changes are a result of the increasing CPI. If you want to ensure that your fund will not fall short, you may want to keep your eye on the inflation rate.
These 2014 personal finance improvements are timely based on the data and reports being released towards the end of 2013. These may change so you have to keep an eye on the news to make sure that your improvement will still be beneficial. It is alright to change your plans as long as you have analyzed that it will improve your finances.
So why not draw up your list right now?