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5 stress-reducing money tips for 2011

January 12, 2011

The confetti's swept up, the bubbly's gone and the countdown to the new year is long over. If you're feeling stressed and tight on cash, though, MoneyRates.com has some advice that may help you ease up on both.

Here, we offer another countdown, to the top five money tips to help you reduce stress in 2011.

Tip #5: Lower your tax burden. As the saying goes, there are few certainties in life, and taxes are definitely one of them. But the tax code is constantly on the move, and so are your deduction opportunities--from mortgage interest and charitable donations to retirement investment vehicles and dependant care.

Keep current on the 2011 federal income tax brackets and rates so you can adjust your behavior for next tax year. And review the IRS's tax tips for 2011 and roundup of tax credits. If you don't already have one, now is the time to seek out a competent tax advisor and estate planner.

Tip #4: Set up systems to manage your money. Whether you've been managing without a strict budget for years or are used to tracking expenditures to the penny, chances are you can use online banking or other tools to make money management easier.

Not one to jump into the latest Smartphone apps? That's OK. A money management system can be as simple as selecting two credit cards and using each for specific categories of purchases, so that the statements for each help you track expenses for each category or set of categories. (Bonus: Many credit card companies will send you a year-end summary by expense category too.)

Above all, whatever method you choose to track your spending, stick with it. Knowing that you have a system will help you not only reduce stress but also potentially free up additional funds for your retirement savings.

Tip #3: Kick-start new food and fun habits. Just because the holidays are over doesn't mean you have to revert back to the same old routine. Nutritious foods and a well-balanced diet have been shown to reduce stress and promote a healthier and longer life. Many healthier foods can require more prep time (think multigrain oatmeal mix and a glass of freshly squeezed veggie juice instead of Pop Tarts) but are often easier on your wallet than processed foods and tastier to boot.

This might be your year to start volunteering, or commit to taking a daily walk with a friend--both of these activities are engaging but don't have to cost a thing. If you have a little cash to invest in your health, join a gym, plan an adventurous vacation, or become a member at an outdoor club. To ease the cash impact, check on your travel or frequent flyer credit card balances. You could be due for merchandise or travel rewards.

Tip #2: Do an insurance check-up. It's tempting to cut costs by reducing your health, home, life or car insurance coverage, but doing so is literally playing with the odds. Reassess your policies--you may be surprised how easily you can painlessly reduce costs just by comparing insurance carriers' offerings.

Don't forget deposit insurance on your savings accounts, even if you don't pay those premiums yourself. Check the FDIC guidelines to make sure your wealth is fully covered.

Tip #1: Invest aggressively in your retirement nest egg. Polls and studies galore show that Americans have insufficient retirement savings. Shoring up your retirement savings is easier said than done, of course, but don't assume you've cut everything you can from your budget. For the part of your portfolio that you keep in cash, ensure that you are earning the highest savings account interest rates keep an eye out for any changes in bank fees.

Bottom line: You can make your money work for you, even with today's low interest rates. If doing so can ease your stress and improve your health, then it will have paid dividends far beyond its monetary value.

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