January provides a great opportunity to get organized and prepare for the year ahead. Now is a great time to think about your finances and your goals for the coming year. To help you get started, we’ve outlined eight key steps you can take to prepare your finances for the upcoming year.
8 Steps to Prepare Your Finances in the New Year
- Map out your budget for the year: Don’t go into the year guessing how much you will earn and how much you will spend. Map out each month, how much you expect to earn, factor in your regular expenses, and plan for any one-time expenses. After that, you will have an accurate picture of how much cash you will have. You can never be too detailed.
- Determine what you can save: Based on your budget for the year, factor in how much you can save each month. Set a goal for how much you want to have in your savings account and take small steps to get there. In addition, find other ways to save money (discounts, deals, and other creative methods). All those small savings can add up in a big way.
- Pay off your debt: As you plan your budget for the year, think about your debt. How much do you owe and how you can comfortably pay it off? It may take time and that is perfectly fine. Factor these costs into your monthly expenses.
- Put your goals in order of priority: What are your financial goals for the year? Are you focused on retirement? Investments? Saving for a vacation? Prioritize your goals based on your personal needs. Then you can determine how best to manage your money for the year.
- Watch out for scams: What you don’t want after everything is to lose money to a scam. Be careful who you give money to and how you pay for items. Be mindful of phone and internet scams, as well as product scams. Protect your wallet!
- Protect your identity: Monitor your accounts closely. Check your bank and credit card accounts regularly and watch for any irregular spending. It is easy for credit cards to be stolen so it is important to do what you can to ensure that your identity is protected. To do that, use cash instead of your bank card or use the same credit card to make purchases so you can track the spending. Don’t give out your personal information unless it is required.
- Get your paperwork organized: Get your tax paperwork organized and start saving your financial information in a safe and secure place. This may be on your computer or in a filing cabinet (or both). Whatever works best for your – start organizing your financial documents.
- Track your spending: You should be tracking your spending regularly so there are no surprises. You may find out that you are spending just a little too much on something or not saving as much as you had hoped. No worries – you can always adjust your spending habits as you go- which is much easier when you’re tracking them regularly.
Work with a financial planner to help you through these steps. Remember, these are not overnight changes and it’s perfectly fine to go at a pace that makes sense for your life.
