Net Gains: Shape Up Your Finances for 2008

With a few quick steps you and your family can be financially protected.

ByABC News
October 1, 2007, 1:53 PM

Dec. 26, 2007 — -- It's the day after Christmas, a perfect time to sit back, reflect and begin thinking about 2008.

As you consider the financial side of life, you might want to adopt a few resolutions for the new year that will you end 2008 in better financial shape than you started.

This list is not exhaustive, but it is realistic for even the busiest individuals. Start small, and your chances for long-lasting success improve.

Turn on the auto pilot. The single best way to build a nest egg and reduce debt is by doing it automatically week after week, month after month. Start 2008 by signing up for your employer's 401(k), establishing an automatic investment plan into a Roth IRA or setting up automatic online bill payments.

Automating your financial life has never been easier, and over the next 12 months, it can make a big difference. It will boost your savings, cut your debt and cut the time you spend attending to your monthly bills.

Built a nest egg you're proud of? Protect it and nurture its continued growth by making sure you're spreading out your investment risk.

Pull out your last retirement plan or brokerage statement and take a look at how your money is invested. Is it invested heavily in a single fund or single stock? Then you may need to diversify by spreading out your investment risk among different asset classes large cap stocks, small caps, international stocks, bonds and cash. You might even want to consider mutual funds that invest in commodities or real estate funds.

If your money is invested in what's called a balanced or target-date retirement fund, then most likely you are well diversified. But if all your money is in that energy fund that the guy at the next desk told you has been going gangbusters, then it's time to diversify.