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Try these 10 financial resolutions

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Each year, millions of us make resolutions to change our lives in the coming year. Losing a few pounds and quitting smoking are some of the most common resolutions. This year, how about making a pledge to improve your finances?

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According to the personal financial planning experts at the Minnesota Society of Certified Public Accountants (MNCPA), the most important aspect to improving your financial position is to have a plan and stick to it. Follow these steps to get started:

Create a budget

A budget doesn't have to be a complicated mathematical calculation. Determine your income and expenses for each month by reviewing your checkbook, bank statements, and receipts for the last year. Don't forget that little things add up, so track what you spend in cash for 30 days. You'll be able to see where your money is going and make the appropriate changes.

Reduce your expenses

Spending less is easier than earning more, so take advantage of every opportunity to save money. Clip coupons, buy off-season, and avoid impulse purchases. Don't forget that small changes add up. Saving $2 a day at the vending machine puts $500 a year back in your pocket.

Where can you make other cuts? Take a look at your cell phone or cable/satellite TV bills. Bundle services for a lower monthly rate or cut back on channels and features you don't use.

Create an emergency fund

Unplanned expenses happen. Whether it's a trip to the emergency room, a car accident or a layoff at work, having an emergency fund can save you from borrowing money when the unexpected occurs. Experts suggest setting aside three to six months of living expenses for when you need it most.

Pay down your debt

If the economic downturn caused you to be a little more reliant on paying with plastic, consider this: paying off a credit card charging 17 percent annual interest is equivalent to investing money with a before-tax, guaranteed return of almost 20 percent. Use your cash for more worthwhile purposes than paying the credit card company.

Save more

A benchmark for how much of your personal income you should save is approximately 10 percent; Americans are currently hovering around 5.8 percent as a personal savings amount. To boost your savings rate, set up an automatic deduction from either your paycheck or checking account to a high yield savings account.

Max out your retirement options

The earlier you start saving for retirement, the better. If your employer offers 401(k) matching, be sure to take advantage of this opportunity for free money. If you've already maxed out your 401(k), consider a traditional or Roth IRA. The maximum 401(k) and IRA contribution limit in 2010 is $16,500 (pre-tax). If you are more than 50 years old, the maximum contribution is $22,000.

Make a will

No one likes to think about dying, but a will can ensure that your assets will be divided according to your wishes. You will want to make decisions about who should have your power of attorney in case you are incapacitated. Don't let the government decide who will care for your family or how your assets will be allocated. This is also a good time to review your insurance coverage.

Donate

Extend the season of giving all year round by contributing something from each paycheck to a charity you support. Giving helps focus on others and keeps finances in perspective.

Raise your tax IQ

Probably the most important, but under-planned, financial action for most people is related to taxes. Whether it is your paycheck withholding or taking advantage of the $3,000 a year capital loss provision, you must plan year round for taxes. IRS.gov is a good starting point to maximize your refund.

Educate yourself

Financial literacy equals financial freedom. The American Institute of Certified Public Accountants' 360 Degrees of Financial Literacy website will help you make sound financial decisions in every stage of your life.

Resolve today to make decisions that will improve your financial strength in 2011, and you'll be on your way to achieving your goals.

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