Top 11 financial resolutions for 2014

New Delhi: The two most common New Year's resolutions involve health and financial goals. A record 54% of Americans say they will make financial resolutions for 2014, according to the Fidelity New Year Financial Resolutions Study. Certainly this year most people will look to save more, spend less and pay down debt, but undeniably there will be headwinds. The economic uncertainty of the past year is also likely to continue this year with people battling inflation, potential changes in interest rates, stock market and rupee. But rather than worrying about how you will be in financial trouble, focus on what you have. It's easier to fulfill a resolution if you set a specific, quantifiable goal.According to experts, it helps to make your resolution very specific. For instance, you might say to yourself, 'Okay I'm going to save precisely 20 percent of my income in the year ahead.' It is a great way to go ahead and if you maintain the momentum, then hopefully you'll meet your goal. Also, Also, don't keep that goal a secret, and try to share your resolution and your progress with a financial buddy.Here are some top financial resolutions, which you can set as your own goals for 2014. “My first priority should be to clear my debts”If you're juggling several different debts the best thing you can do is to tackle them head-on. In 2014 your priority should be clearing debts that have more serious consequences than others if you don't meet usual repayment. Most people have at least some form of debt, whether that's on credit or in the form of a mortgage, a loan, or an overdraft. Some of these debts take can be cleared relatively quickly while others will have to be spread over several years. Keep mortgage payment as your highest priority debts because your home may be put at risk if you don't keep up repayments. In case you don't know the rate of interest charged to each of your debts check statements or contact your lender to find out. Figure out which debt has the highest APR or Annual Percentage Rate, the borrowing interest rate for your loan or credit card debt, and put as much spare cash as you can into reducing and finally clearing the balance, making overpayments.“I'll boost my savings considerably” Look towards your savings-inclined future. Take one single small step, and never quit focusing on the smaller things until your bank balance increases in a healthy way. Set a goal, as the feeling of saving toward something can feel very motivating. Remember, as soon as your paycheck arrives, it's time to save. You have to automate your savings because if you wait until the end of the month and try to save what's left, there's typically nothing left over. You can also pay yourself first when unexpected cash flows into your savings account. Also, look to jump-start a savings plan with tax refunds or year-end bonuses. The most important aspect regarding savings is that you got to hold yourself accountable first. If you overspend one month, it will impact your progress toward your goal. “I'll start an emergency fund”Open a separate bank or savings account by the name of “emergency fund”. If you find an account that earns interest, that's even better. As with your other savings, deposit money into the account every month before you pay other bills. Make this savings part of your spending plan and don't get tempted to spend it on anything else. Look over your finances, and determine how much you can afford to put towards your emergency fund each month. Even Rs 3000 a month will help. ‘I'll save more for my future”Saving is another important key to financial success. It is important that you plan to build your financial future right away – whether it's your retirement, your family's future needs or simply attaining your personal goals -- all that matters is savings. By finding out ways to lower your everyday costs, you'll build habits that will pave the way you deal with your financial situations. Step back and look at the patterns in daily spending habits. Do you see any red flags there? Do you really need the health club membership? Do you really want that foreign vacation? Can you do with metro or want to take your car everyday you go to office? Hit the streets for a walk or run, get out in the sun with some friends or use the park's exercise equipment. Think once again whether you really need to spend on new clothes, restaurants or that expensive movie ticket. Just make sure that you are spending money only on things are really essential and putting extra money in a bank account. "I will make a budget."A budget is a written document or electronic file that helps you take control of your personal finances. It's a plan of what money you expect to receive and how you expect to spend it. If you're spending less than you earn, use your budget to work out how much you can put aside each pay to improve your financial position. If you're spending more than you earn, use your budget to see where your money is going. Your budget needs to be accurate or it won't work. Find out things like:A record of your day-to-day spending. Keep bills of your regular expenses like rent, mortgage, credit cards, phone, power, car, and insurance, etc.A list of annual costs like medical expenses, gifts and holidaysYour income details.Details of any regular savings you make.“I'll develop a long-term plan”A long-term plan gives you the roadmap about where you are going. Such a plan will help you create a strategy for paying off all of your debt while saving for a new house at the same time. Choose to decide between short-term, mid-term or long-term sub-goals. For instance, if your medium-term goal is to buy a new car within the next one year, then research how much amount you'll need to pay for it. Then, determine your target purchase date. These small wins become the key milestones of your financial plan.“I'll track my spending in order to cut it”You can use a sheet or online tools to see where your money goes each month and find places where you can cut back. Evaluate every possible expense to see the possibility to reducing it. Small changes like eating out less, taking metro, cutting your phone and internet bill, will make a big change in your bottom line. Consider getting rid of a second car, downsizing to a smaller home, or moving to a place where the cost of living is lower. “I will talk about money with my partner and family."Given that most people are uncomfortable discussing about money, it is important that you speak to your partner about your financial goals. “I'll make sure that my risks are covered with insurance”Some of the risks that you may witness may include your car getting stolen, your house getting robbed, and people getting sick. These things carry financial cost. So you probably need good car and home insurance policies, and disability and life cover. “I'll invest with a basic asset-allocation model”Own a variety of asset classes — preferably in their cheapest configuration, ETFs or lowest-cost funds.“I'll evaluate my mobile phone, internet and cable plan”Do you really get annoyed after seeing a huge mobile phone bill, Internet expenses and a hefty cable plan? See if you can cut some of them.