In addition to putting money away in a savings account for a rainy day, there are several other ways to save yourself money and vastly enhance your financial outlook for the new year.
Mellody Hobson, president of Ariel Investments and "Good Morning America's" personal finance contributor, dropped by the show to share her five tips for starting 2010 on the right financial note.
Tip No. 1: Invest in the stock market, and do it long-term.
Since the stock market hit bottom in March, it's gone up an astonishing 57 percent, Hobson said, adding that she believes it will continue to climb. One of the reasons for this recovery is that there is a record amount of cash in money market funds, and Hobson said individual investors will return to the stock market as the economy improves.
"One of the reasons I am very encouraged is not only the continued economic recovery but the fact that so much money is sitting on the sidelines. $4 trillion in money market accounts," Hobson said.
So what does that mean for you? Get in on it now. According to Hobson, one of the easiest ways to start saving more is to increase your 401(k) contribution, even if it's only a few dollars. You should make it a practice to save more each year. Most employers match 50 cents for every dollar that you contribute, up to 6 percent. Since this is free money, Hobson says you should definitely take advantage of it.
But many companies have stopped matching their employees' 401(k) contributions because of the down economy. If your employer has done this, Hobson said it's a good idea to keep contributing. For one thing, many employers stopped matching contributions because business was bad, but they'll start matching again once things improve.
Also, contributing to your 401(k) -- even without the match from your employer -- is always a good idea because you're enhancing your own long-term financial security.
Your credit report is one of the most important items in your life, and its accuracy is of the utmost importance. Your credit score could mean bigger interest payments when it comes to getting a loan for a car or a home, or could make or break your bid for your dream job.
"The score is just a point in time grade. The accuracy of that report is extraordinarily important. 80 percent of credit reports have a mistake," Hobson said.
It's not the responsibility of the three main credit reporting agencies -- TransUnion, Equifax and Experian -- to ensure the information on your report is correct. That responsibility is yours, Hobson said.
Hobson suggested that you review your credit report the first week of every year. You can get a free report each year from all three reporting agencies at www.annualcreditreport.com. There are other sites that claim to offer free credit reports, but what they don't tell you is that you have to sign up for some service in order to get those reports, Hobson said.
Tip No. 3: Change is coming to credit card regulations, so know the new rules.
Hobson said you should read the fine print on all credit card agreements to understand the new rules, many of which are taking effect February 22.
In the lead-up to the implementation of the new rules, Hobson said many credit card companies are increasing their rates and fees. Consumers need to know what those fees are now, instead of being caught by surprise later, she said.
"They are charging anything from inactivity fees for not using your card…to putting a floor, not a ceiling, on how much you are going to pay in fees," Hobson said.
You should also call your credit card company to get an understanding of what the changes will mean for you to decide whether you should keep the card or cancel it, she added.
Tip No. 4: Be prepared for rising minimum payments.
Because of the new legislation, credit card issuers are increasing the minimum payments, so cardholders should be ready for that as well, Hobson said.
For example, J.P. Morgan has raised its minimum payment to 5 percent, up from 2 percent, and MBNA, Citibank and Bank of America are raising their minimums from 2 to 4 percent, she said.
It's not a topic that many people like to think about, but Hobson said 58 percent of Americans haven't made a will.
If you do not have a will, someone else is going to decide how your estate should be divided. A will allows your loved ones to avoid the major headaches that could leave lasting negative financial effects, Hobson said.
Getting a will drawn up is easy. For simple estates, there are Web sites – for example, www.legalzoom.com -- that will help you to create a will for a small fee, she said.
If your estate is more complicated, though, Hobson recommends seeing an attorney.
Hobson's Web-Only Extra Tip: Teach your children about money.
Teaching your children financial responsibility is one of the most important things you can do as a parent.
Teaching them will force you to be more aware, and setting a good foundation early on will ensure that they have lasting good habits.
Your discussions with your children don't have to be very complex, she said.
You can start by talking to them about how much things cost, and how long it would take to earn that amount of money. You also can talk about basic expenses, such as electric and gas bills and their monthly cell phone bills.
There are tools available that can help you to craft these discussions with your children, Hobson added. One site, www.themint.org, is an interactive Web site that teaches your child about spending, investing and giving.