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Consumers Should Be Wary of 'Financial Amnesia'
WASHINGTON (1/2/14)--It's easy to make New Year's resolutions, but it can be harder to carry them out, especially when it comes to financial planning.
 
In a recent poll by the National Foundation for Credit Counseling, 56% of the respondents said they would be better off financially this time next year. The positive outlook was more than three times the number of those who said their financial situation would be about the same.
 
It's good to be optimistic about your financial health, but it takes more than hope and a New Year's resolution, said Gail Cunningham, spokeswoman for the non-profit foundation that represents credit counselors nationwide.
 
"People need to guard against financial amnesia, the affliction of too quickly forgetting the financial mistakes and pain of the past," she said. "Although the future can't be predicted, consumers can protect themselves from financial unknowns by making smart money decisions today."
 
Credit unions continue to be a resource for members who want to improve their money management skills (See Tuesday's News Now story "CUs Help with New Year's Financial Resolutions.")

Cunningham suggested consumers start by building a financial plan that includes:
  • The unexpected emergencies. Tuck away 10% of each paycheck into a rainy-day fund, the foundation said.
  • Long-term savings. If unemployment strikes, bridge money will be needed to cover a minimum of six month's expenses.
  • Known periodic expenses. Set aside money for the fun--birthdays, anniversaries and holidays--and the necessary--vehicle registration and insurance premiums--that occur at the same time each year.
  • Charitable giving. Review your previous charitable contributions to estimate this year's donations.
  • Health insurance choices. Review changes to insurance plans for any impact on cost of prescriptions, co-pays or other medical expenses.
  • Investing. Disciplined investing is critical to building wealth long term.
  • Debt reduction. Instead of allocating minimum monthly payments into the budget, set a date by which all current credit card debt will be eliminated. This step will free up money to go toward satisfying goals such as saving or investing.
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