Refresh Your Finances for 2015
January 12, 2015
It’s a brand new year, which means you get to wipe the slate clean and make good on your financial resolutions. So whether it's putting money aside to pay down debt, planning for the future or getting organized for tax season, now is a great time to change up your financial habits. Now that the holidays are over, it’s time to pack away the seasonal décor, clean the house after all of the festivities, and—yes—pay those holiday bills. When you are in a productive post-holiday mode is the perfect time to evaluate your financial situation and tidy up your budget, bank accounts, debts, and financial records. Here are six ways to spruce up your finances:
- Balance your budget If you've been promoted, you are retiring, you’ve transitioned from two incomes to one, or you are starting a family, this is the perfect time to revisit your household budget. Consider using online personal finance tools to help you set a budget and keep track of your accounts. You'll see where your money is going and where you can adjust spending to attain your financial goals.
- Pay off holiday debt once and for all Clear up your credit lines, and pay off the purchases you made over the holiday season. Put yourself on a stricter payoff plan specifically for the debt you accumulated over the holidays. Clearing this debt quickly will put you in a much better financial position for the rest of the year. It's easy to fallback into debt, so put a plan in place while you're at it to maintain a zero balance.
- De-clutter your countertops and go paperless A good way to cut down on clutter is to opt for electronic bill payments. It decreases the amount of print mail you receive and can even help to prevent identity theft. Secure your online bill payment with strong passwords and change them on a regular basis. Signing up for a vendor's online automatic pay system (helpful for fixed-payment bills such as cable and internet) allows you to set up recurring payments so bills are automatically paid. This can help you avoid forgetting to pay a bill and the late fees that go with it. It also keeps countertops paper-free.
- Clean up your credit score Boosting your credit score is always important, but before you do, it's imperative to learn about your credit history and the various accounts that affect it. To make sure your credit report is free of errors, order and review your free credit report (you're entitled to one free copy from the three credit bureaus every year). Check for any errors or accounts listed that are not yours. Companies do make mistakes, and it's your responsibility to make corrections when you catch them, so your credit score isn't accidentally lowered.
- Set up an emergency fund Life is full of unexpected surprises. A car repair, illness, or unemployment can catch you off guard and leave you financially stranded. When the unexpected happens, it's important to have a stash of cash set aside in an emergency fund. At a minimum, it should hold three months’ worth of your living expenses. If you pay $2,000 a month to cover the basics such as housing, utilities and food, then put aside $6,000 in your emergency fund. If you have dependents, your emergency fund should consist of six months of your living expenses.
- Review all of your financial statements Hopefully, if you are working with a financial professional, you are keeping up to date by reviewing your bank and credit card statements and bills regularly. If you are not, it’s time to start in order to make sure you're not paying fees you don't recognize or subscriptions or services you never use.
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