Getting Your Financial House In Shape For The New Year

I don’t know about you, but for me the new year brings a desire to get things in order. I think it has to do with the new start that inspires me. Usually that means I go on a diet, attempt to get the house organized, and set goals I want to accomplish in the upcoming year. Mr. Not Made of Money and I usually set some time aside during January to do a financial review and then we’ll we make any adjustments necessary to our spending plans and financial goals.

Even though we haven’t updated our goals yet for 2013, I know that one of my continued financial goals will be to keep our food costs down, as I’ve found that is one area of our monthly spending that creeps up if I am not diligent about it. I’ve considered going to a cash only basis but for now I am still finding success simply by keeping a running total of debit card expenses and that’s been enough to keep the grocery spending in line. Anyway, if you are looking to get your own financial house in order this year, here are a few items you may consider addressing:

Update Your Budget
The beginning of a new year is a good time to revisit your budget. If you don’t have one, then the new year is a perfect time to make one. You can use financial software, a spreadsheet, or even just a plain sheet of paper to lay out your budget plan. The key thing here is that you make it a workable plan that you will be able to follow.

Start An Emergency Fund
I absolutely cannot stress enough how important it is to have an emergency fund. If you don’t already have one started, then this should be a priority on your list of things to do. Make a plan to regularly set aside money so you can build up your financial cushion so you can weather any storm that heads your way. Last year our emergency fund kept us from going into debt due to a large amount of unforeseen expenses (home repairs, medical bills, etc.)

Pay Down Your Debt
Make a plan this year to begin to pay down your debt. There are quite a few methods to accomplish this (debt snowball, etc.), but the key point is that you have to get started somewhere. Make sure you include your plans for debt repayment in your budget.

Improve Your Credit Score
Your credit score is one indicator of your financial health. If you know that yours needs some attention, take the steps now to begin building it up. If you have poor credit, then using credit cards for bad credit (i.e. such as a secured credit card) can help you to show a history of responsible use and rebuild your credit history and score.

Save For Retirement
It’s never too early to begin saving for retirement. Be sure to maximize your 401K contributions.