THE BLOG
12/23/2016 07:53 am ET Updated Dec 24, 2017

Don't Make a Resolution!

Don't make a financial resolution. Make a plan.

Resolutions made at this time of year tend to have lofty goals: lose weight, stop smoking, get out of debt. And while these goals are certainly worthy, it's an old Savage Truth that a goal without a plan is just a dream!

The latest Fidelity Investments' Annual Financial Resolutions Study rejoices that as the economy is now in better shape, people are more likely to make more financial resolutions. When the survey was started in the midst of the financial crisis, the resolution focus was on getting out of debt. Now, with the economy growing and unemployment down, Fidelity notes that the number of people planning to save more for retirement is at an all-time high of 64 percent, compared to 53 percent just last year.

But how do you turn these great intentions into an actionable plan? Here are five tips for improving your financial future, relatively painlessly.

1. Increase your retirement plan contribution. Now is the perfect time to increase the deduction for your company plan - or increase the automatic monthly withdrawal from your checking account that goes into your IRA. What? Didn't open an IRA last year? Contact Fidelity or T. Rowe Price and start with as little as $1,000 -- if you make an automatic additional monthly contribution.

2. Know where you stand now in retirement funding. Almost every major mutual fund company offers an online retirement calculator. Fidelity's Retirement Score Calculator asks 6 simple questions about your age, your current savings, your annual income, your income replacement goal in retirement, and your risk tolerance. Then with a click you can see where you stand - and how much more you need to contribute each year to have a good chance of maintaining your lifestyle in retirement.

3. Pay Down Your Debt. Nothing will destroy your future faster than debt. It's a bigger risk to your financial health that the stock market, by far. It may seem risky to invest in the Standard & Poor 500 index mutual fund to earn only a dividend yield of about 2.5 percent , while hoping for market gains, not losses. But paying 18 percent or more in interest on your credit card balance is a sure road to financial disaster.

Remember the simple formula to pay down credit card balances: Simply double the current minimum monthly payment and pay that exact same amount every month(even as future minimum requirements decline). Don't charge another penny.

Your balance will be paid off in less than 3 years - compared to as long as 30 years if you only pay the required minimum every month.

4. Spend less. Saving more or getting out of debt is a lot easier if you just decide to spend less! It can be a combination of small things - opt out of dining out, or taking taxis, going to the movies. Or it could be one big item a month that you sacrifice in your goal to create a better future. Unthinkable to cancel your cable service? Or give up your car? Think what a dent it could make in your spending -- and your debt.

5. Earn more! This is the easiest way to be able to pay down debt and save more money. This doesn't mean asking the boss for a raise. But Uber proved that millions of Americans want flexible work to add to their income. Now look around at all the things you could do to help others - driving seniors, baby-sitting children, working in a retail store. All of them can add temporary income to reach your goal.

Taking action is the difference between making a resolution and making a plan. What action will you take right now to make your financial dreams come true? That's the only way it will happen. And that's The Savage Truth.