As 2013 comes to a close, and a new year is about to begin, many people start to think about making resolutions.
According to a list of the most popular New Year’s resolutions published by USA.gov, “manage debt” and “save money” are things that a lot people are attempting to accomplish every January. In order to help jump start an improved financial life for 2014, here are some money management tips from nationally-recognized personal finance experts.
Gail Cunningham is a spokeswoman for the National Foundation for Credit Counseling, and she suggests that people track their spending. If one writes down everything she purchases and every dollar she spends over the course of a week, that list will paint a very clear picture of where all her money runs off to. Knowing where one’s money goes will allow for proper budgeting and the ability to redirect funds to the appropriate expenses.
Despite these benefits, a recent National Foundation for Credit Counseling survey found that 20 percent of participants had no clue what they spent on food, housing, and other necessities. “I think they’re afraid to, fearing that it will reveal areas in which they need to cut back where they don’t want to make cuts,” she said.
Robert Kiyosaki, the author of the bestselling “Rich Dad, Poor Dad,” recommends learning the difference between good debt and bad debt. Kiyosaki said, “Bad debt is debt you have to pay for and makes you poor. If I use credit cards to buy new shoes it makes me poor. Good debt makes me rich and someone else pays for it." His example of good debt: financing the purchase of real estate. Real estate will, generally, pay more to the owner than the original purchase price upon sale, making it an investment, or good debt.
Blogger Jim Wang of Bargaineering.com pushes for people to follow this oldie but goodie piece of financial advice: build an emergency fund. While the standard recommendation for an emergency fund is three months’ expenses, Wang says the current economy calls for six to 12 months, or more if it can be managed. According to Wang, “The key is to be able to manage emergencies from savings, rather than having to liquidate your retirement account or leaning on a high interest credit card. Trying to resolve an emergency with a credit card can lead down a dangerous path of debt.”
These are just a few expert tips to help you get the ball rolling on a better financial life in 2014. Check out the nearest branch of the Kansas City, Kansas Public Library for personal finance guides from Kiyosaki, Dave Ramsey, Suze Orman, and many others, that can make 2014 your richest year yet.
Emma Claudius is the business librarian for the Kansas City, Kansas Public Library.