9 Easy Moves With Lasting Financial Value

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BOSTON (TheStreet) -- With the New Year came a host of resolutions. Many of us offered a pledge to be smarter and more dedicated to our finances in the unfolding year.

What moves will not only guarantee financial success in 2011, but set the stage for achieving longer-term objectives?

The starting point, according to Frank Braddock, a North Carolina-based financial adviser with JHS Capital Advisors, is drafting a blueprint.

"We are telling folks to sit back and really do a good financial plan," he says. "I think that keeps people on track and helps them when things get weird. A written financial plan helps you focus on where you are trying to go and maybe not panic when things get as dicey as they have been. I think it forces you to take a step back from the day-to-day and look at what you are trying to accomplish."

A financial plan is about more than chasing gains. Braddock says people need to "have a real conversation about risk and managing risk."

"When you sit and look at where people were five to seven years ago, they thought they were much more risk tolerant than they actually proved to be," he says. "Risk comes in a lot of different guises I don't think folks really think about. When people think about risk, they think about losing money, which obviously is a big thing. But the risk of not getting where you want to go and running out of money, longevity risk, is the single biggest risk that clients face."

"You can't manage what you don't measure, so quantify goals," says Neal Ringquist, president and chief operating officer of ASI Advisor Software, maker of Goalgami, a free online, goal-based financial planning tool. "Control what you can control. You can't control the performance of the markets, but you can certainly control what your goals are and how much you can contribute and save towards them. Depending on what your goals are, there are lots of little things to do."

Here are some of those easy steps to take:

1. Ratchet up 401(k) contributions to, at the very least, take advantage of a company match. For all those who haven't already, Ringquist says, this should be the year.

2. Add the 2% reduction in FICA taxes directly into retirement savings. This Obama administration tax break adds to the incentive to lock in 401(k) deposits to the limit.

Other moves can blend frugality and creativity to achieve short- and long-term goals.

3. Credit card rewards programs connected to 529 savings plans (tax-advantaged, return-bearing college savings vehicles overseen by states), are underused by those saving for college expenses, he says. A variety of credit cards can be used. Fidelity, for example, offers an American Express card where every month the points accrued are rolled automatically into a 529 plan designated by the holder.

"Many set up a credit card tied to frequent-flier miles," Ringquist says. "The amount of miles it takes to redeem a domestic flight has gone up. With so many restrictions, sometimes you can't even get a flight. But here's a way you can earn a return on your points. You can't do that with miles. You could actually spend your way to savings."

4. Review your household budget this year and you can uncover additional money that might be better earmarked for savings, Ringquist says.

"With cable bills, a lot of people bought original packages, even a year or two ago, that had everything under the sun," he says. Cutting our premium channels you never watch can save hundreds of dollars a year.

5. Banking and credit card fees can often be waived by merely making a phone call, he adds. If not, you can start shopping around for a better deal.

6. Recurring credit card charges for movie and music services, wine clubs and storage facilities add up significantly, but can become so routine they are forgotten. Get rid of them.

7. Reclaim grocery store savings from using a coupon or club card that get tallied on a receipt. The amount saved should be put into a savings account or retirement plan, Ringquist suggests.

The most recent Principal Financial Well-Being Index, a quarterly survey by Principal Financial Group, found that workers' top two resolutions heading into the year were paying off credit card debt (35%) and putting a set amount of money into savings each month (30%).

Retirees' top resolutions were to reduce their spending by a specific amount each month (19%), pay off credit card debt (17%) and put a set amount of money into savings each month (15%). If that's so, says Catherine Golladay, vice president of 401(k) Education and Advice for Schwab, there's a painless way to make those resolutions into realities:

8. Take advantage of free investment advice most likely offered with your plan, Golladay says. A recent Schwab study found that 401(k) investors who take plan-offered advice save more and panic less, with savings rates doubling among "advice takers" from 5% to 10% of pay.

Retirement strategist and financial coach Bill Losey has another suggestion that might seem tough:

9. Accumulate "up to three years worth of income in savings, CDs, money markets or treasury bills."

But all you have to do is start the process, he says.

"This is where you should start taking money from when you retire," he says. "Use this 'safe-money' benchmark strategy so the money you need is in the safest yet lowest-yielding investments where your principal is protected. It helps to weather the ups and downs of the stock/bond markets where the rest of your long-term money is allocated and diversified properly."

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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