Manage Your Money in the New Year

Did you resolve to become financially healthy this year? Here is a list of tips to get you and your money in shape. Act on your financial plan today, it will pay off tomorrow. You can do it!

Do a reality check Assess your net worth using this handy browser based balance sheet. Get into the habit of checking your net worth monthly and resolve to increase it each time you check.

Watch what you spend Get a small notebook and write down every penny you spend for the next month. Your spending habits may surprise you. While shocking, this exercise can help you decide where to make changes.

Plan to be rich Now that you know what you are spending, make a written budget and follow it. This is the most effective way to live within your income and learn good spending habits. Review your expenses against your budget weekly or monthly.

Clean financial house If your bank account is unreconcilable, open a new one and resolve to keep it clean, meaning record every transaction in the register and reconcile it when the statements come. At a minimum, use online banking to keep an eye on your account and never give the bank the satisfaction of charging you a single overdraft fee.

Check your credit score Get a free report at freecreditreport.com. If it’s low, take steps to improve it. Always pay parking tickets and library fines, if left to amass fines and penalties these can actually negatively impact your credit score. Even if you aren’t looking to use credit yourself, potential employers and landlords may run a credit check on you before making a final decision.

Make a habit of recordkeeping Don’t scramble at tax time -– or miss a deduction -– by organizing your records early in the year. Save receipts, cancelled checks, pay stubs, bank and investment statements, and proof of any other deductions you may want to claim. Folders and spreadsheets are handy tools to keep order.

Reduce your debt The less money you owe, the less interest you pay, and the more money you can funnel into future investments. Figure out which of your credit cards has the highest interest. Pay the minimum monthly charge on all of your debts except the one with highest interest. Throw every extra cent you have at that debt until it is paid off. Continue in this way until you are debt free. If possible, consider switching high interest balances to a 0% APR credit card.

Start saving Set aside a percentage of your monthly income as savings. Ten percent is a good rate for investors in their twenties and thirties; if you are behind in your retirement planning, adjust to a higher percentage. Keep it simple, set up an automatic investment plan to pay yourself first monthly.

Plan for retirement Contribute to an IRA or your company’s 401k plan. Your company is likely to match a portion of your contribution, check with the plan administrator at your place of employment for more information.

Pay with cash This is the absolute surefire way to stay out of debt. If you don’t have the cash for a purchase you are considering, decide not to buy it right now. Then make a plan to come up with the cash to make it happen. Remember, there are two things you can do with money: save it or spend it. Saving money increases your wealth, spending money leaves you poorer.