With the new year comes resolutions and for many, organizing their lives. Most people focus on their health when the new year begins, but I want to help you with getting your finances in order.
When you get your finances in order, you improve the chances of reaching your goals. You also lower the stress that money has in your life. So why wouldn’t you want to start working on getting your finances in order?
Here are a few tips to help you with getting your finances in order for the new year so you can achieve your financial goals.
4 Effective Tips For Getting Your Finances In Order
#1. Review Last Year’s Spending
If you aren’t budgeting your money, you need to start. I know that budgeting isn’t sexy, but it is a necessary evil if you want to be on financially stable ground. Instead of looking at a budget as a negative thing, look at your budget as a positive thing. We tend to see a budget as limiting our spending. Start to look at it as a path to reaching your goals, whether they are retirement, a new house, or a dream vacation.
For help with getting started with a budget, check out this step by step post. You can also use the calculator below to see how your spending compares to others in your area.
If you do have a budget, look over your spending from last year. Where did you overspend? Did you save enough? Maybe you have a new expense that you need to account for.
Whatever the case, the only way you are going to get ahead is to review what you did previously, adjust, and improve. It’s how you get ahead in any area of life.
#2. Start Saving
Most of us don’t save enough money. In fact, many of us save nothing. This has to change. The fatal flaw most make is that we spend first and save what is left over. Sadly, many times what is left over is zero. To change this, we need to save first and spend second.
I personally do this. I have transfers set up from my checking account to my savings accounts every time I am paid. The money goes right into my savings account that day, so when I look at my checking account balance, I never miss it.
I am free to spend every last cent in my checking account. I can do this without worry since I am still saving money every month.
I urge you to try this. In fact, I would suggest those that hate to budget try this method out. It is a simple solution to get you to start saving money. I suggest you start out transferring 10% of your pay into a savings account every paycheck.
Once you have 6 months saved up for emergencies, then you can start saving for other things in life – a new house, a vacation, general investing. Of course, you should have money taken out of your pay each week for your 401k as well. If you aren’t saving for retirement, need to start saving for that too.
Finally, you can use technology to your advantage here. Download the free app Qapital. They will round up your purchases to the next dollar and transfer that amount to a savings account. I’ve been using them for a few months and my savings have really added up. You can learn more here and when you do sign up, they will give you $5 for free!
#3. Pay Down Debt
Debt has a major impact on your finances. A negative impact. When you are in debt, you aren’t working for yourself. You are working to pay off your debt. You will never get ahead when all of your money is going towards getting out of the hole.
The solution is to work on getting out of debt. The first step is getting your spending under control. You do this by following the first tip and creating a budget. From there, you need to start putting some money towards your debt.
The easiest way to do this is to organize your debt in order of smallest balance to largest. Pay the minimum on all your debt expect for the smallest balance. Put as much as you can afford towards this one.
Once that debt is paid off, pay the minimum to all of you debt except for your next smallest balance. Put all of the money you can towards this debt, plus the minimum amount you were putting towards it before. This strategy is called the snowball method and it works wonders.
In addition to the snowball method, you should open up an account with Qoins. It’s free to join and they round up your purchases to the next whole dollar and transfer that amount. Once you reach a certain amount, the money you rounded up gets put towards your debt. You can learn more here.
#4. Organize Documents
It can be confusing to know what papers we need to keep and what can be shredded. Here is a great list of what financial documents to keep.
Basically, you need to keep all of your important documents for tax time. This includes 1099’s and W-2’s. For most of us, you can simply look at your last paystub and compare that with your W-2. If everything matches, you don’t need to keep your paystubs for the year.
When it comes to receipts, most can be shredded. However, if they are for business expenses, home improvements or tax bills, you need to keep these.
Most other receipts can be shredded once you match them to your credit card statement if you used your credit card or your monthly bank statement.
Getting your finances in order is a surefire way to get ahead and get yourself on stable financial ground. If you are tired of living paycheck to paycheck, or are tired of the stress money has in your life, I urge you to take a weekend and get your financial life organized. Doing so will pay for itself in the months and years to come.
Hi, my name is Jon and I run Penny Thots. I blog about many personal finance topics, but my specialties lie in investing, paying off debt, and achieving your financial goals. You can learn more about me on the Author Page.