How to Put Your Financial Resolutions on Auto Pilot

NEW YORK (MainStreet) — Let’s face it: If we were well organized we wouldn’t need New Year’s resolutions. We’d need only little changes as conditions evolved, and we’d make them as soon as needed, throughout the year. We’d never need to say, “I’ll lose 40 pounds and triple my savings rate.”

Of course, many of us do need massive overhauls, but those are just too hard to do. So what are some fiscal resolutions that have a good chance of actually being followed — things that don’t take enormous feats of will power or sacrifice?

Let’s start with basic organization — the kind you can do by picking up a few file folders. Put them in a box or file cabinet and keep all those little slips of paper organized as they come in: tax documents in one file, annual statements in another, bills in a third, product warranties in a fourth and so on. Tax time still won’t be fun, but perhaps a bit less of a headache, and you’ll get your money back when the new blender explodes.

It’s also worth spending a few bucks on financial software such as Quicken, or going the free route with an online service such as Mint.com. With these, you can funnel to one place the data from all your financial accounts and have an organized way to pay bills online. Over time, you may use other features, too, including Quicken’s retirement-planning tool.

Online bill paying, through Quicken or your bank, is a terrific tool if you travel. To get the most out of it, also have your bills delivered online so you can get them when you’re away. You won’t have to worry that your credit card bill is sitting unattended at the neighbor’s while you vacation.

Many of your “payees” will also offer alerts by email and phone text to let you know if your bill is due, your checking account is running low or your credit card is near the limit. These free services wipe out a lot of life’s confusion and uncertainty.

To make things even easier, have your paycheck automatically deposited in your checking account so you don’t have to race to the bank or ATM. Many payments such as credit card and utility bills can be automated as well. Just be sure to keep on top of your balance. To avoid overdrafts, consider setting up overdraft protection or designating another account as a backup.

Another candidate for automation: investments. People with 401(k)s and similar retirement-savings plans do this at work, but you can also have your bank, brokerage or mutual fund company draw a set amount from your checking account every month. With automatic investing you don’t forget, and it’s not as easy to find an excuse for skipping a month.

The automatic approach also provides the benefits of dollar cost averaging. By putting in the same sum every month, you buy more stock or fund shares when prices are down, fewer when prices are up. That gives you a lower average cost than if you bought a set number of shares every month.

Naturally, it always pays to save more. If you already have a fairly aggressive savings habit, remember to nudge it up each year by 2 or 3 percentage points to account for inflation. Most long-term investment plans assume the investor does this. You may be able to do this with little pain, simply by looking for better deals on our cellphone, cable service and insurance policies.

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