A study shows the economy has a direct effect on mental health.

Holiday spending can make money a greater source of stress in our lives, though a recent national study reported that the economic downturn has already taken a significant toll on Americans' mental health. That's why it's a good idea to make some specific money resolutions for 2010.

Alexandria, VA based Mental Health America, a century-old mental health advocacy group, reported in October that unemployed Americans were four times as likely as those with jobs to report "symptoms consistent with severe mental illness." But for those still employed who "experienced involuntary changes in their employment status, such as pay cuts or reduced hours, also are twice as likely to have these symptoms, even though they are employed full time."

If monetary stress is part of your life, resolve to extinguish it over the next year. Consider the following resolutions to lead a better financial life in 2010.

Resolve:

1. To put your most important goals on paper: What do you really want out of life? Granted, all great dreams don't cost money, but many of them do. Money buys freedom to travel, to retire early, to start a business, to change careers. Putting goals in writing gives them a formality and a starting point for the planning you must do.

2. To understand how much risk you can really tolerate: One of the most beneficial things financial planners do is help you articulate your financial goals and establish (or re-establish) your tolerance for risk. Even though the market has recovered somewhat from the crash of 2008, it's worth revisiting how much risk you can handle to get what you really want.

3. To track your spending: If you haven't purchased financial accounting software or set up a reliable accounting method of your own, this is the year to do it. Diligent expense tracking is the first critical step to getting personal finances in order. Free resources like Mint.com also offer financial planning software, but always check the security of your data.

4. To consider advice on taxes and planning: Maybe you've always completed your taxes alone and put your faith in your employer's retirement plans to chart your financial future. If you're like most people in this position, your goals are still far from reach. Start getting references on good tax professionals and consider sitting down with a financial planning professional to discuss your current retirement savings picture and what you can do to improve it.

5. To cut your credit card debt: If you can't ever seem to get yourself completely out of credit card debt, make this the year to do it. Take inventory of your balances, figure out if you can consolidate them under your lowest-rate card, and resolve to pay off an amount that exceeds the minimum -- on time, every month. Once your cards are paid off, don't close them that could have an adverse effect on your credit score. Just put small repeat purchases on them that you can pay off in total at the end of the month to keep them active. Oh, and pay cash from now on.

6. To save: If you haven't signed up for your employer's 401(k) plan or begun a savings plan tailored for the self-employed, this is the year. And resolve to save at least 5 to10 percent of your take-home pay based on your cash flow, and place the maximum in whatever retirement savings plans you qualify for, especially if your employer will match all or part of that contribution.

7. To get ahead on your mortgage: This advice isn't for everybody, but if you've paid off your credit cards, apply the same principle to your mortgage payment. Every dollar you prepay will potentially save thousands in interest over the life of the loan if you plan to stay in your home long-term. In fact, if you make one extra payment a year, either at once or in equal monthly shares over the course of a year, you can cut at least five years of payments on a 30-year loan. Just don't short your retirement investment plans to accomplish this.

8. To invest in yourself: If going back to college or taking specific coursework will help you advance in your career, plan to do it. If investing in a health club membership that you actually use makes sense for your health as well as your insurance costs, do it.

9. To redefine the way you shop: Most people were forced to change their shopping habits noticeably during the recession, but there are still ways to fine-tune. As a suggestion, get a legal pad and make that your centralized shopping list - use a single page for groceries, stock-up goods (it's wise to start buying essentials in bulk if you can measure the savings), and note bigger expenditures you'll need to make at specific times. Taking that pad with you wherever you spend money is a good way to keep a grip on your wallet as long as you don't stray from the list.

10. To attack that miscellaneous column: Do you really need deluxe cable? How much are you paying for your Internet service? Can you wear a sweater around the house and lower the thermostat? In every budget, there are items that can be cut or at least trimmed. Take a hard look at all your "essentials" to see how essential they really are. Aim for a target of at least 10 percent in savings every time you cut and start setting that money aside on a regular basis.


December 2009 -- This column is provided by the Financial Planning Association (FPA) of Central Ohio, the leadership and advocacy organization connecting those who provide, support and benefit from professional financial planning. FPA is the community that fosters the value of financial planning and advances the financial planning profession and its members demonstrate and support a professional commitment to education and a client-centered financial planning process.