It’s the end of another year, and it’s time to start planning if you are bound and determined to be more financially organized next year. Decide now what you want to do to start getting on top of your finances in the new year. To help you make a financial lifestyle change, here are 5 financially fit things that you can do in January:
- Budget and/or spending plan check: Whether you operate on a budget, spending plan or some other type of cash flow measurement system, now is the time to give it a check-up. Compare your yearly performance in 2009 with your 2008 performance, and look ahead to improvements that can be made in 2010. Tweak your budget as necessary. And, if you don’t have some sort of way of tracking your cash flow, make this the time you develop one. Understanding the flow of money through your personal economy is essential if you want to grow your wealth.
- Retirement account overview: Now is a good time to look at your retirement account. See if there is room to increase your contribution, and determine whether or not you are getting the full advantage of a company match program. If you have the ability to make your own investment decisions in your company retirement plan, diversify away from company stock. Also, now is a good time to re-balance other aspects of your investment portfolio and see where you are at, and whether you are on track to meet your goals.
- Consider your deductions: While you might still have time to squeeze in a couple more deductions before the year ends, chances are you are probably done at this point — for 2009 at least. Gather up receipts and other supporting documents so that you are properly prepared. If you have a tax preparer, now is a good time to make an appointment, even if you don’t plan on going in until February or March. If you prepare your own taxes, start chipping away at the forms a little at a time, so it’s not so overwhelming. And plan ahead for the coming year. Make a money plan that includes maximizing deductions and credits as you go through the year.
- Create a debt repayment plan: If you have debt, even if it is only a mortgage or student loans, now is a good time to create a debt repayment plan (click here for 25 ways to help you reduce your debt). Even if you can’t pay everything off this year, you can still work up a strategy to make inroads into what you owe. The less interest you pay to others, the more money you can put to work. Gather your debts, and organize them using whatever debt repayment method (snowball, snowflake, etc.) that you are most comfortable with.
- Savings: Re-evaluate how much you have been saving. Create a plan for building up your emergency fund, and increasing other savings contributions to accommodate short and long term goals. Consider looking for higher yields in different accounts, by building a CD ladder or using a little of your money to invest in dividend paying stocks, index funds, ETFs or other vehicles that can magnify your returns. (Just be careful; you could lose. Never invest more than you can afford to lose, and realize that you are responsible for your investment decisions and losses.)
The new year offers you a chance to get things off on the right financial foot. Of course, the hard part is sticking to the plans once you make them!
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