7 Financial New Year’s Resolutions You’ll Actually Keep

It?s that time of year again. ?Many of us make New Year?s Resolutions with the best of intentions. ?Our motivation level is high, and we skip into the new year ready to make some big changes. We know from study after study, however,? that we are likely to fail. ?One study pegs the success rate at just 8%.

There are several reasons for such a high failure rate. First, we set?vague goals. ?A goal to lose weight or save more money may sound fine, but such goals?lack the specificity needed to drive actual change in our behavior. ?Vague goals lead to a second problem. ?It?s difficult to know when you?ve accomplished your resolution. ?Without a concrete goal, it?s impossible to define success. ?And finally,?we tend to attempt big changes overnight, when smaller, more attainable goals would be more effective.

With all of this in mind, what follows are seven New Year?s Resolutions that can (1) improve your finances, and (2) are easy to accomplish. ?In fact, you might think of these as more like a financial checklist than goals.

1. Lower your investing costs: ?It?s easy to forget just how much we spend in investment fees. ?In the case of mutual funds, ETFs, and most investment advisors, the fees are subtracted from our investment portfolio. ?I suspect we?d behave differently if we actually received a bill in the mail each month. ?They key is to keep these costs to a minimum. Examine each of your investments to see if you can switch to comparable funds that charge less. ?Low cost index funds are ideal.
2. Track your investments: ?Tracking your investments today has become extremely easy with a number of free tools. ?You can quickly evaluate not only the cost of your investments but also your asset allocation. ?This in turn can help you with the next item on our list?rebalancing.
3. Rebalance your portfolio: ?With the rise of the equity markets, it?s likely that your investments no longer track your initial asset allocation plan. ?Rebalancing forces us to sell investments that have outperformed and buy investments that have underperformed. While this may seem counterintuitive, it?s exactly what we should be doing?selling high and buying low. ?Check your portfolio at least once a year and rebalance your investments if they have deviated from your plan.

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