Resolving to pick up better money habits in 2015? Probably not.
Fewer than a third of Americans said financial planning was their top New Year’s resolution for 2015, according to a survey released in December by Allianz Life Insurance Co. of North America. Fitness and health goals topped the list.
“With a healthier U.S. economy, continued market strength and lower unemployment, people have forgotten the trauma they experienced in 2008-2009,” said Katie Libbe, vice president of consumer insights for Allianz Life. “Things are looking up, but that can change overnight.”
Simply adding goals to a list, of course, doesn’t make anything actually happen.
So rather than saddling your retirement plan with a daunting list of specific money resolutions for 2015, think about a few relatively small things you can do now that can pay big dividends a decade or more from now:
Train your brain. Rather than focusing exclusively on changing specific money behaviors over long periods of time, think about changing your mindset in the moment.
Like a dieter who learns to focus on how good he will feel after choosing a healthy meal instead of junk food, start to visualize the satisfaction involved when you make a string of meals at home instead of going out to pricey restaurants.
Note that in both cases, the focus isn’t on some unattainable goal far in the future — a perfect size 4 or millions in the bank at retirement — but on truly enjoying the feeling of health and of living a sustainable lifestyle.
Diversify taxes. Another relatively painless way to boost your ultimate retirement picture is to diversify the way you’ll pay taxes down the road.
If you’re just starting to save for a retirement that’s more than 30 years away and have access to a traditional 401(k) with deductible contributions and matching funds from an employer, consider kicking in a few more dollars to a Roth IRA. With a Roth, contributions don’t qualify for a tax deduction, but the money grows tax-free and is generally withdrawn tax-free in retirement (subject to certain conditions).
Roths aren’t just for the young, however. Depending on your income and time horizon, gradually converting some of your nest egg to a Roth plan can provide more options for minimizing taxes as you age into requirements for drawing down traditional retirement accounts.
Invest found money. Little windfalls, like tax refunds or cash gifts, can make a huge difference over time. And even if the money goes to nonretirement accounts like college savings or paying down debt, they can reduce the drag on retirement savings later.
When my daughter was born, we put a few thousand dollars into some state-based college savings bonds and promptly forgot about that little pot of money. They will cover a big chunk of her tuition bill next year.
Pay the bill. Treat retirement saving like the electric bill — something with a due date that must be paid before more discretionary expenses can creep into the budget. Like the automatic deductions from a paycheck to a 401(k), making regular contributions to an IRA keeps savings on autopilot.
And even if you’re already retired, effectively spending a little less than what you initially budgeted will help create a cushion for later in retirement if financial markets don’t go your way.
Read more: 5 small things to do for retirement