New Year's is naturally a time when many people resolve to improve their personal financial situation.
In fact, 56 percent of those who responded to a recent online poll said they'd "be in a better place financially at this time next year."
Only 18 percent of respondents indicated their situation would stay about the same; 17 percent said their situation would worsen and 9 percent said they couldn't make a prediction.
The poll was conducted online by the National Foundation for Credit Counseling, a nonprofit organization in Washington, D.C.
Financial optimism is healthy, but it takes more than hope to achieve financial success, according to NFCC spokesperson Gail Cunningham.
"People need to guard against 'financial amnesia,' the affliction of too quickly forgetting past financial mistakes and pain," Cunningham said in a statement.
To avoid this ailment, make a financial plan, including these categories:
- The unexpected. It's usually emergencies, not daily routines that wreck people's budgets. Allocate 10 percent of each paycheck to a rainy-day fund.
- Long-term savings. A savings fund of at least six months of income can help cover expenses of short-term unemployment without building up an unmanageable amount of credit card debt.
- Known periodic expenses. Set aside money for expenses that occur at the same time each year such as birthdays, anniversaries, holidays, vehicle tags and quarterly insurance premiums.
- Maintenance. Things will break, and usually at the worst possible time, so set aside savings for household and car repairs.
- Travel. Budget for events such as a family vacation, out-of-town wedding or funeral or major sporting events that require travel.
- Major purchases. Plan ahead for big expenditures like buying or remodeling a home or purchasing a vehicle.
- Charitable giving. "Being generous is a virtue. However, being generous to a fault isn't," the NFCC said. Review your previous giving patterns to estimate this year's donations.
- Medical care. Plan for medical insurance and dental and prescription drug needs.
- Investing. Investing on a regular disciplined basis is an important component of building wealth.
- Debt reduction. Set a date by which all current credit card debt will be eliminated to free up money for saving and investing.
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