Make Financials Simple in 2009

January 1, 2009 By Tisha (Kulak) Tolar

HAPPY NEW YEAR, READERS!

As we roll into a new year and tax time starts to freak us out, there are some ways to prepare yourself for a more stress free financial year. Starting early and getting organized is the key to starting a new year with a clean slate.

Here are a few simple ways to get ready:

1. Get Organized

Take some time over a weekend and gather together all of your paperwork from last year. This should include finding last year’s tax return information, banking statements, and all of your other monthly bills and statements that have accumulated. If you are not currently using a filing system of any kind, invest in a file cabinet, some hanging folders, and a box of manila folders. Go through all of your paperwork and separate into categories. Shred all other things you no longer need. Make sure you mark your folders clearly and keep important information, such as insurance policies accessible and easy to find. As the year moves along, keep up with your filing system so you can skip this step next year and always be organized. There is nothing more frustrating or un-motivating when you have to go searching all over different parts of your house to find what you need. Storing it all in one place, in an organized manner may keep you focused on paying down your debts and finding more financial freedom.

2. Create a Budget & Track Your Spending

Now that you know where all your paperwork is, you should review all of your balances and start making a budget with the goal of paying down your debt. Along with your budget, start first thing in the new year to track where you are spending every penny of your money so you can create a more reasonable budget and figure out how and where to trim your spending.

3. Start Using Cash

While it might be tempting to spend cash when it is burning a whole in your pocket, start learning to visit the bank or ATM once a week and withdraw your budgeted allowance. You will no longer have to deal with balancing your checkbook, following up on debit transactions, or worried that you have overdrawn your account. This can also help you stop using your credit cards as often, which will help you work toward your goal of paying off your debts, since you are not accumulating new ones.

4. Automate Bill Payments

Since you no longer have to worry about overdrawing your accounts now that you are using cash, sign up for as many automatic bill pays you have available to you. This eliminates the bills you have to worry about paying on time each month to avoid late fees.

5. Automate Savings

Make a trip to your human resource department after the holiday and find out the process for making direct deposits to your savings account each pay week. Since the money is automatically taken from your pay and put into savings, you are likely to be able to successfully maintain and build your emergency fund.< >< ><–>

Posted in personal behavior, personal finance basics, taxes

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