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Consumers Advised to Save This New Year

By Faye Mergel
Published: Sunday, January 3rd, 2010

It is New Year once again, another time for consumers to make their financial resolutions Aside from focusing on making the best resolutions; consumers are advised to keep track of their credit report to avoid any financial disaster in 2010. Meanwhile, Harvard professor David Laibson has one for investors—something that would have saved them thousands and millions of dollars if they knew about it sooner.

Consumers Advised to Save This New YearThe economics professor advises investors not to time the market next year, noting that many investors sold their stocks when the economy was at its lowest this year and then missed a huge rally that followed in the closing quarter of 2009.

To the consumers’ side now: for many Americans, ”saving more” will be number on their new year’s resolution list for 2010, way ahead of the perennial favorites “exercising more” and “losing weight”, according to a survey released recently by Putman Investments. Analysts predict that consumers will be carrying fewer debts on their credit report next year to avoid loan defaults and delinquencies that could ruin their financial lives.

While saving money could seem a daunting task, finance advisers say it is something that could be done on autopilot. They advise consumers to set up automatic deductions from their paycheck or checking account. Increasing contribution to their 401(k) account by a mere one percentage point is also another way experts cite that could help consumers save big.

Additionally, finance advisers tell consumers that they would do best if they commit half of any increase they receive this year to savings. They say such plan would be easy to accomplish, since it is an amount consumers did not previously have in the first place.

Financial planner Jon Schroeder suggests another easy way for consumers to save: placing rebate checks and coupon discounts into savings as well. For instance, if their receipt says they have saved $5 on their purchase, Schroeder tells shoppers to put it in their savings.

Moreover, consumers are advised to include periodic checks on their credit report as part of their resolution, at least once a year to make sure that it carries no inaccurate or fraudulent item. To avoid forgetting this resolution, experts suggest it must be performed on one’s birthday. Consumers are entitled to one free credit report from each of the major bureaus every year—a federal right that consumers should exercise, specialists add.

Finance advisers also advise Americans to make it a goal to become financially independent by the middle of the year—the Fourth of July would be an excellent date, they add.

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