THE BLOG
01/01/2014 03:39 pm ET Updated Dec 06, 2017

New Year's Resolution: 3 Easy Tips to Be Financially Fit in 2014

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Ring out the old, ring in the new,
Ring, happy bells, across the snow:
The year is going, let him go;
Ring out the false, ring in the true."
― Alfred Tennyson

It's that time of year to make a promise to yourself to start doing something good or stop doing something bad on the first day of the year. Nearly 50 percent of Americans regularly make New Year's resolutions; and according to the Fidelity 2014 New Year Financial Resolutions Study, an all-time high 54 percent of Americans say they are considering resolutions regarding their finances. Here are three simple tips to help keep you financially fit in 2014.

No. 1: Open Your Statements

Whether you are doing-it-yourself or working with a professional, facing your finances begins with opening all of your account statements -- bank, credit card, mortgage, 401(k), brokerage account. Take a snapshot of your finances so that you may set priorities about what to do next.

Here is a process that I recommend:

  • Write it down. Set three goals that are realistic and achievable over the next 12 months. Whether you choose an online tool or composition notebook, figure out where you will record and track your finances and goals.
  • Set a Schedule. Unlike hitting the gym 3-4 times a week, you do not need to monitor your finances every day or every minute. Mark your calendar to review your finances quarterly -- that's just four times a year. It is at these times when you can set or make changes to your three goals. This gives you roughly three months between quarterly reviews to implement and execute specific items designed to achieve your goals.

No. 2: Reduce Fees

From credit cards to your investments, you need to identify your fees. I wrote an article, "Know Your Mutual Fund Fees and Expenses," that may help you to evaluate your investment portfolio. Identify where improvements can be made and set your plan in motion to make changes that can positively impact your financial bottom line.

No. 3: Cut Your Losses

Follow the old trading adage, "Cut your losses and let your profits run." When performing a quarterly review of your portfolio holdings, look at what you own. Do you own individual stocks, bonds, mutual funds, and/or exchange traded funds (ETFs)? Make an assessment whether you are adequately diversified. That is, make sure that you are not too heavily exposed to a single stock or sector. Next, take a look at where your gains and losses are. While your portfolio should aim for diversification in order to control risk, it is my experience that it is a good practice to cut losses. Sell out of things that are not working and redeploy those funds elsewhere. By upgrading on a quarterly basis, you are also controlling risk by making sure that no single loss grows too big because you were not paying attention. If you really love a specific company or fund, you can always buy it again later.

Thatʻs it. Keep it simple and achieving your financial goals can be as easy as 1-2-3. I wish you a prosperous and heathy new year!

This post originally appeared at the Runnymede Blog.

Please share your New Year's resolution and goals in the comments section.

photo credit: Lester Public Library via photopin cc