Resolutions that really pay off

By following these few simple steps you will enjoy a prosperous New Year.

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by Bryan Borzykowski
December 20th, 2012

Online only.

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As the year comes to a close, a lot of us are thinking about how to make 2013 a little better than 2012. While most New Year’s resolutions tend to focus on dieting and exercising, make sure you take the timhttp://www.moneysense.ca/wp-admin/post.php?post=39014&action=edit&message=10e to jot down a few personal finance resolutions, too. After all, you won’t be able to afford that gym membership if your finances are in shambles.

Here are some of my resolutions, which I think apply to many Canadians. I’ve come up with these based on my own financial situation, but also from the numerous interviews I’ve done with fund managers, advisers and other financial experts over the past year.

Invest more in the market

The majority of investors continue to be afraid of stocks. They’re still piling into bond funds despite a clear, albeit slow, economic recovery. That’s made many parts of the market cheap. If you dig around you can still uncover some solid undervalued companies in most sectors. If you wait too long to get in, it’ll be too late. A lot of fund managers suggest looking closer at U.S. financials. The health of U.S. banks is closely tied into consumer confidence and a recovery in the housing market, which is starting to take hold.

Put more towards the mortgage

This is the resolution that most resembles the dieting pledge. You know, the one you say you’re going to keep every year but never do. It takes a major effort to voluntarily move money from your bank account and onto your housing debt. But the more you can put down now the less you’ll pay in interest later and the sooner you can be debt free. Imagine how much money you’d have each month if you didn’t have a mortgage. I won’t be able to pay off my house next year—or for several years for that matter—but the closer I can get to owning my own home outright, the better off I’ll be. Just make sure you’re not taking on other debts in the process. You’ll put yourself further behind if you pay down your mortgage, but pile on debt on the high-interest credit card.

Spend less

I don’t have any credit card debt—for those who do, paying that off should be resolution number one—but my family still spends too much on things like clothes and take out. We’ve been getting better over the years, but it’s a good idea to review where your money is going and this is as good a time as any to survey your expenses. Even the best savers (I don’t put myself in that category) lose track of what they’re spending and end up swiping their plastic more than they planned. I resolve to review my plan and cut back where I can.

Reduce my car insurance

It’s easy to lock into car or home insurance and never review your policy again. But things change. Maybe you’re now working from home or your spouse is taking a year off to raise a new baby; these little changes can actually save you money. Car insurance is calculated based on the type of car you own, how much you drive, if it’s used for business and more. If you don’t drive it to work, then you should pay less. In my case, I got a few tickets over the last four years (I swear that no left turn sign wasn’t there!) which raised my car insurance to a level that would turn most people off driving. After three years the tickets stop counting toward your insurance premiums. Since my record is almost clean, it’s time to shop around and see if I can reduce my insurance costs.

Go somewhere hot

I know I just said that it’s important to spend less, but I also want to enjoy life. And that often means spending money. We’ve decided to stay home for the holidays this year—travelling in December is, as you probably already know, quite expensive— but we still want to take the kids south at some point in 2013. In order to do that, though, I’ll need to put away money into a vacation fund each month, which I’ve already started. I’ll add a little more in January, so hopefully, by the end of next year we’ll be soaking in the sun on the beach.

While these are my resolutions, they tap into some of the things we should all try and get better at next year—saving, investing and working towards living a debt free life. We’d love to hear about your personal finance resolutions for 2013, let us know what you plan to do in the comments.

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