By KIMBERLY PALMER
Along with a fresh start, the new year brings uncertainty about changing tax laws, growing concern over online privacy and security, and challenges for almost every demographic group—even the wealthy, who face steep tax increases. To help you get ready to tackle your own money goals for 2013, we gathered our best advice from the past 12 months and organized it into 50 bite-size steps:
Specific holidays used to loom large in the world of coupon hunters, who expected to see massive discounts on July Fourth, Labor Day, Black Friday, and other big shopping days. But recently, that's been shifting as retailers are offering sales all year long, and often at unexpected times. In 2012, for example, retail experts noted that Christmas sales started in October, and continued all season, partly in response to customer demand. That means shoppers should always be on the lookout for the best deals, regardless of the calendar date.
As the economy recovers, retailers are eager to pick up the biggest share of consumers' spending what they can, and in some cases, that means adopting more flexible pricing policies. Towards the end of 2012, several big-box stores, including Target and Best Buy, launched temporary price-matching policies. That trend could continue into 2013, which means customers can be more assertive about asking stores to match prices they find elsewhere.
Much stress can come from disagreeing with your spouse or partner about how you should be spending shared income. Indeed, in author and yoga teacher JoAnneh Nagler's case, it even contributed to divorce. But she and her husband were able to reconcile (and remarry) when they jointly agreed to a disciplined debt-free lifestyle. By scaling back on restaurant meals and other splurges, they're able to invest in what they really value, including their creative pursuits and romantic weekend getaways.
When you've built up a sizable amount of debt, it's virtually impossible to pay it off overnight, and attempting such a feat can be frustrating. That's why Nagler, who had $80,000 in credit card debt at one point, urges fellow debt-strugglers to go slowly. First, she changed her spending habits and set up individual savings accounts for each of her goals. Once she got those costs under control, she started paying off her debt.
Tax rates are likely to rise for many Americans next year, especially high-earning ones. To lessen the stress from those changes, taxpayers should adjust their spending and saving habits as early as possible to prepare to hand over more cash to Uncle Sam. Taking advantage of any credits and deductions, as well as putting more money into tax-advantaged retirement accounts, can help ease the impact.
Just 1 in 10 Americans have done the math to figure out how much they need to save for retirement, but it's an essential step in making sure there's enough cash for those much-deserved golden years. Financial advisers generally recommend saving enough to replace 80 percent or more of your income; that means someone who earns $80,000 should probably save around $2.1 million.
Paying high fees, choosing portfolios that are overly conservative (or overly risky), and failing to update or even check on those investments on a regular basis are just a few of the common mistakes people make with their retirement accounts. To avoid missteps, employees can often rely on free services offered through their company's human resources department or retirement services provider. Fidelity, for example, offers free seminars and online information to clients.
Alicia Munnell, director of Boston College's Center for Retirement Research, cautions that putting aside 9 percent of your income into a retirement account is "grossly inadequate." Someone who starts saving at age 35, plans to retire at age 67, and expects a 4 percent return, for example, needs to save double that, even after taking Social Security into account. Other financial experts recommend saving as much as one-quarter of your income, in both retirement and after-tax accounts, to make sure you're fully covered.
If manually shifting money into savings and investment accounts is too time-consuming or too painful, consider setting up automatic deposits. Many banks make it easy for customers to do that, and, in fact, might even offer rewards for doing so. Wells Fargo, for example, waives monthly service fees on some of its accounts when customers set up recurring automatic transfers.
If you pay off your credit card bill each month and earn rewards for your spending, don't forget to cash in on them. The biggest bang-for-buck often comes from purchasing retailer-specific gift cards, which have been pre-negotiated by card companies. Farnoosh Torabi, financial expert and television personality, recently picked up an Apple Macbook Air with her points, which she also uses to buy gift cards for family members.
If your credit card isn't meeting all your needs, it might be time to find one that does. Comparison websites such as nerdwallet.com, indexcreditcards.com, and creditcards.com make it easy to compare the benefits of different cards to figure out which one suits your needs. If you carry any sort of balance, there's only one factor to focus on: finding the lowest interest rate.
Bank policies can vary widely, from offering above-average interest rates on savings accounts to making it easy to budget online with extra tools. Consider your own lifestyle and then find the bank that best matches it. If you travel a lot, you probably want a large bank with thousands of ATMs throughout the country (and beyond). If you're trying to save more, then you might want to focus on the savings rates.
Customers are increasingly voting with their feet and switching banks when they're not happy with their current one. That also means customers have more leverage to ask for the changes they want from their current bank, as banks struggle to retain loyal customers. If you want lower fees or a higher interest rate on your savings account, ask your bank what they can do for you—they might be able to offer you a better deal than the one you're currently getting.
Frustration with banks' policies, such as new fees, has motivated thousands of customers to jump ship and join credit unions, according to the Credit Union National Association. It can be a good decision, especially considering that credit unions often offer higher interest rates on savings accounts as well as lower fees and lower rates on auto loans and mortgages. They also prioritize spreading financial literacy to their customers.
Just because the economy's struggling to make its big comeback doesn't mean you have to delay asking for a raise. Certified financial planner Lauren Lyons Cole suggests first checking out salary-comparison sites, such as Payscale.com and Salary.com, to see if your own income is out of whack with that of your peers. If it's lower than it should be, review your accomplishments and present them to your boss, along with a request for a raise.
The lack of job security these days has inspired many Americans to pick up a second stream of income by moonlighting. According to the website Payscale.com, the highest-paid moonlighting gigs are in law, clinical psychology, senior copywriting, and information technology security. Freelance website Elance.com predicts that the trend toward freelancing, especially in the creative-services sector of the economy, will only grow throughout 2013.
When people juggle more than one job, they can quickly feel overwhelmed with responsibilities. Veteran job-jugglers say they survive by staying organized, waking up early, and avoiding time-wastes such as television. Many also work on the weekends and some even take a sabbatical from their day jobs to focus exclusively on their second job for a few months.
When you land a new job, the human resources department can help you sign up for all of the new benefits, from flex spending accounts to health insurance to retirement accounts. Signing up for retirement benefits as soon as possible can pay off later: The earlier you start putting money away, the sooner it can start growing. TD Ameritrade calculates that saving $100 a month between ages 21 and 41 will create a nest egg of $471,358 by age 67, assuming a return of 8 percent per year. Waiting until age 41, however, will generate just under $60,000.
If you want more motivation to ramp up that side income in 2013, here it is: In most professions, income stops rising around age 40. Payscale.com reports that in many professions, you earn quickly in your twenties and thirties as you become more valuable. Then around mid-career, you plateau, and as a result, salary increases slow down. (Certain careers, including those in law and high-tech, are exceptions.) One way to make up for that loss is to earn more money outside your full-time job.
Replacing take-out and restaurant meals with home-cooked goodness can save you hundreds of dollars throughout the year. If you feel hesitant in the kitchen, a few hours with the Food Network or browsing foodie blogs will help get you in the mood. Investments in certain tools, such as cookbooks, immersion blenders, or quality pots and pans can also make the kitchen more enticing after a long day.
