OK, it's that time again, where every advice column offers up financial resolutions for the New Year. Fidelity Investments' latest annual survey of the top Financial Resolutions for 2016 reprises the big 3: Save more, spend less and pay down debt. Thanks Captain Obvious and see you next year.
The Fidelity survey also notes that about 28 percent fewer respondents intend even to attempt resolutions this year. Perhaps we can offer a few ideas that are a bit easier to attain but can still make a significant contribution to solidifying your financial foundation.
Photo — Please put this mug shot of Chris Hopkins of Barnett & Co. in our system to use every other Wednesday when it will run with his column.Simplify and automate. If you haven't already done so, let this be the year to take full advantage of automated services and online technologies like bill paying and paperless statements.
Many of the regular bills you receive each month in the mail are available electronically from the provider. Yet despite the obvious convenience and the reduced potential for lost or overlooked invoices, only about one fourth of all household bills were presented electronically in 2014, according to a study by Fiserv. And over half of all electronic payments were online submissions of paper invoices.
Consider diving into e-bills and electronic payments. Most of your regular obligations can be set up to schedule payment on a specified day of the month directly from your bank account and notify you via email of each completed transaction for your records. No late payments, lost checks or dog-eared envelopes.
While you're at it, plug in to electronic bank statements to reduce the security risk of receiving confidential data in the mail. Banking industry surveys estimate that 69 million customers still get paper statements at an average cost of $9 each. Agreeing to e-statements will improve security and timeliness, and may even save you money. Most brokerage firms, for example, offer significant discounts on trading costs to customers who go paperless. And five years' worth of electronic documents take up a lot less space in the attic.
Review your electronic security. Especially given the foregoing admonition to go paperless, take the opportunity each January to protect your electronic footprint. Change your important passwords at least once a year, and try to avoid using the same password for multiple sites. Huge hassle, to be sure, but well worth the effort and much easier than recovering from identity theft.
Check your credit. January is also a good time to pull your annual free copy of your credit reports from the three major reporting agencies. Visit www.AnnualCreditReport.com to request a copy of each agency's version of your credit history to verify accuracy and scrutinize for potential fraud. If you spot unauthorized activity, contact the agency to resolve erroneous or fraudulent items. Note that contrary to popular belief, these firms are very interested in maintaining accurate information and are generally quite responsive. Also beware of other sites purporting to offer "free" credit reports in exchange for subscriptions, and never give a credit card number in exchange for credit information. AnnualCreditReport.com is the only site specifically authorized by Federal law.
Teach your kids basic money skills. Include your children in some of your financial planning and execution throughout the year to impart a basic understanding of budgeting concepts and responsible money management. Too often, a young person's first critical financial lesson involves climbing out of a debt hole in young adulthood. The return on investment of time in your kids' fiduciary understanding will be incalculable, and you may just find that it helps you focus more on achieving last year's resolutions (save more, spend less, reduce debt).
Happy New Year.
Christopher A. Hopkins, CFA, is a vice president and portfolio manager for Barnett & Co. in Chattanooga.