A new year means a fresh new start, and if you are anything like me, you are looking at cleaning up your finances in 2014.
Every year, I do a few things in January with my finances as housekeeping items. It makes me feel like I’m on the right track and sets my year up for financial success.
Make Financial Goals
The first thing that I do at the very beginning of January is to define exactly what it is that I want to accomplish that year. I don’t set these goals as resolutions, because I want to increase my chances of success, so I set them as goals.
Setting the goal should be the first step so that you can outline what you need to do to achieve it.
Cut Back Where Possible
In 2013, I set the goal to build up my emergency fund by $5,000 over the course of the year. When I set the goal, I knew that I’d have to cut back on some of my expenses to achieve it, so I wouldn’t have to sacrifice my lifestyle. I calculated how much I’d have to cut back (and where) to meet my goal and got to work.
This year, I “cleaned up” about $200 worth of expenses by contacting my service providers, closing some old accounts, and giving up some of the extras I was allowing myself.
Cutting back where possible can be instrumental in having a good year financially.
Clean Up Financial Accounts
January is a great time to review whether or not the accounts that you currently have are still working for you.
Review your bank accounts, any debts you may have, and look at whether or not the credit cards that you currently have are meeting your needs.
Don’t just stick with your current bank because that’s what you’ve always done. If they are charging you an arm and a leg for services you regularly use, find another bank!
Do a credit card comparison to find a credit car that might meet your needs better, and cancel any cards that you aren’t using. If you carry a balance on your card, consider doing a balance transfer to one of the 0% credit card deals out there to save quite a bit of interest over the course of the year.
Update Insurance Information
Things change year to year, so it’s important to update your insurance information at least once per year. Think about whether or not you are still comfortable with your deductible, and whether or not anything has changed with your home, vehicle and life insurance needs.
Maybe you had a second child which would require more coverage on your life insurance. Maybe you live in a flood zone and forecast is looking extra wet in the coming months. Don’t just let your insurance continue on without reviewing your coverage and information; if it is out of date you may not be covered if disaster does strike.
Get Documentation Ready for Tax Time
It wouldn’t be financial housekeeping if you weren’t getting ready for tax time. January is the best time to start gathering documentation for your income taxes; the past year is still fresh in your mind so you are less likely to forget something than you would be if you were gathering information in April, and there’s no panic to get everything ready.
Get yourself organized earlier in the year to avoid the stress later on.
Do some crucial financial housekeeping this January to ensure you have a successful year.