You'll quit smoking. Lose weight. Spend more time with the kids -- next year.
New Year's resolutions are rarely followed. But the best resolutions one can make involve something crucial: sound financial footing in troubled times.
"Consumers are going to have to be five times smarter in 1992 because they're caught in a massive financial squeeze," said Robert Heady, publisher of Bank Rate Monitor in North Palm Beach, Fla.
Interest on money is low, credit-card rates are high. Consumer confidence is low, unemployment is high. Safety nets like health insurance, life insurance and pensions, especially when companies close, aren't always safe after all.
"People have to start doing some homework to protect themselves, and I don't mean reading Money magazine," said planner Harold Evensky of Coral Gables, Fla.
Here, in alphabetical order by subject, are the experts' suggested 1992 resolutions:
Resolve to quit spending needlessly on bank fees.
Hundreds of dollars a year can be saved by checking your bank statement and using automated teller machines with caution. Avoid per-check fees, fees for dropping below a minimum balance and bounced-check fees. Avoid using network ATM machines, which charge per transaction, instead of ATMs owned by your bank, which usually are free.
Draw up a written budget, and follow it.
This should be your road map to success, telling you where you are in relation to where you should be. It should trace the flow of your money and show you ways to cut expenses.
Start by listing all after-tax income for the month. Then list all of your monthly expenses. Don't forget to budget for entertainment and miscellaneous expenses.
It's simple, and it works. By simply listing all of your income and expenses on a piece of paper, you get a better idea of where your money is going. Once you know that, it's easier to make necessary adjustments.
Resolve to pay down debt; switch to a lower-interest card.
"Credit card rates are too disgustingly high," said Heady. "There's absolutely no excuse for carrying a card with 19 or 21 percent interest when you can pay it off, cut it in half, mail it back to the bank and get one at 9 percent."
Some card issuers now charge over 21 percent, and 19 percent is common. Far cheaper Visa and MasterCard rates can be had from out-of-state banks. Or, paying with cash or check will
eliminate interest charges and encourage budget-minded buying.
Also, consider that with current interest rates low, you're not earnings much on your savings. You might as well use the money to cut your debt from credit cards and personal loans.
Resolve to start saving for your child's college education.
This will happen only if money is set aside every month before other bills are paid, planners say. "If you wait until the end of the month, the money won't be there," said Kathleen Day, a Miami-based financial planner.
She favors formalized saving, such as through payroll deduction. Parents can set up a separate, untouchable savings account. Grandparents can set up a tax-deferred variable annuity, in their names, with the grandchild as beneficiary.
Resolve to set financial goals.
Decide where you want to be at the end of 1992, and develop a realistic plan for getting there. Check your progress every few months to see if you are still on track.
If you have a major expense looming down the road, start saving now. If you have trouble saving money, try payroll deduction, if your employer offers it.
Resolve to look into refinancing your loan.
The prime interest rate just dropped a percentage point, so mortgage rates will fall again. Refinancing at a lower rate saves thousands of dollars in the long term, hundreds a month in the short term.
Refinancing is an option if the answer is yes to these questions: Is there at least a two-point spread between the interest rate you're paying now and market rates? Will you stay in the house or condominium long enough to recoup the cost of getting the loan?
Resolve to check the pulse of the companies that insure your life and health.
In light of recent trouble in the insurance industry, ask your agent for industry ratings of insurance carriers and consider a change if ratings are unacceptable. "Keep in mind that if your insurance company goes out of business, you might not be able to get insured," said planner Evensky.
Also, ask yourself whether you are getting the most out of your health insurance and medical benefits. Many employers offer flexible benefit plans that allow workers to pick and choose what they need.
4 Resolve to re-examine and diversify investments.
"Look at each investment and decide if that's where you'd want the money, if you were making an investment today," said planner Meg Green of North Miami Beach, Fla. "If not, move it to improve it."