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Life Health > Life Insurance

How to Help Your Clients Keep Their New Year's Resolutions

By Ben Altom

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Here’s a new version of a timeless article that we first ran Jan. 17, 2017 — and seems likely to age well.

The first thing I mention when talking with folks about financial resolutions in the New Year is the root of the word “resolution.”

Hint: It comes from the word “resolve.”

Most people who set New Year’s financial resolutions commonly like to focus on “big rocks.” In other words, they tend to zero in on solving larger, more difficult money challenges such as paying down mortgages, planning for retirement or saving for a child’s college education.

While this may seem like the best approach, financial resolutions should start with bad financial behaviors from the previous year, not weighty goals that can take much longer than a year to achieve.

If you’re an agent or advisor with clients who aspire to achieve total financial wellness, encourage these people to focus on behaviors first and “big rocks” second, and specifically review areas that need improvement over the previous year.

One possible benefit: Clients will see that you care about them, and can help them with everyday life.

Another possible benefit: Clients may find they have more cash not only to pay big, known expenses, but also to insure themselves against life, disability, long-term care and longevity risk.

Here are four tips to help individuals properly set financial resolutions for 2017 and make them easy to achieve.

1. Adjust the budget.

First and foremost, you need to take a look back. How was your spending last year? Where can it be improved or dialed back? Identify the big expenses along with any hidden costs that may have slipped past you. Those costs could be as simple as your daily coffee runs to Starbucks. Flag them for the New Year.

The easiest way to stick with financial resolutions is to find the ones that can be most easily accomplished and start with them. Get specific, and figure out why you might be spending too much or not saving as much as you would like to. Resolving the issues that kept you from hitting your goals in the previous year will set the table to knock out those “big rocks” in the New Year.

For example, something as simple as making your coffee at home in the morning instead of going to Starbucks could save you $3 to $4 per day, or $60 to $80 per month, or $720 to $960 per year.

Another thing to be conscious of is lending money to family and friends. Too often, this amounts to giving cash away. It can be tempting to help out the people you care about. But people who always give in to those temptations could do significant damage to their savings.

2. Pay off credit card debt.

This next tip is a popular resolution, and fairly obvious: Anyone using credit cards and not paying them off needs to stop immediately. I know – they’re a great way to pay for large items. But if people who don’t get a handle on their debt, the rising interest rates, slumping credit score and accumulating liability won’t be worth the delayed payments.

3. Buy smarter.

Start using technology. Consumers looking to refine their shopping process in 2017 should use a smart phone and online sites to locate deals. Apps like ShopSavvy can help them find the lowest prices. Sites like RetailMeNot aggregate thousands of retailer coupons, so consumers can maximize savings.

For the biggest bang for your buck, focus on groceries. Coupons are still the common method for saving money while grocery shopping, but sites like emeals.com will help shoppers not only spend less, but cut down on wasted goods, too. In other words, don’t miss out on easy deals!

Also, if a client uses a bank with a budgeting app, advise them to take advantage of that. Technology that helps categorize spending and tag purchases can be a huge asset in planning a new budget or fixing an old one.

3. Save more efficiently.

If saving more isn’t a priority for the New Year, it should be. According to a recent survey from GoBankingRates.com, more than half of Americans have less than $10,000 saved for retirement. One in three people have nothing saved. So the sooner someone starts, the better.

Instead of setting a general resolution of “saving,” advise clients to make targeted efforts to put away more money. For example, they might maximize contributions to an employer-matched 401(k) account, or they could begin with something as simple as setting aside $1,000 in an emergency fund. A well-funded emergency fund will help pay for those times when “life happens,” without having to use a credit card.

When it comes to financial resolutions, never discount small expenses or ignore problem areas. They all make a difference, and will set your clients up for a financially successful 2017.

— Read 18 Reasons Americans Are Afraid to Retire, on ThinkAdvisor.

Ben Altom (Photo: First Tennessee)Ben Altom is the vice president and director of First Tennessee@Work.

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