Tips to Tune up Your Finances
The new year is a time for everyone to make resolutions and do things a little differently. If you are like most people, at least one of your resolutions included something to do with money. And like most people, you may have already forgotten what it was.
Don’t worry, it’s not too late. You can still make some new New Year resolutions. Here are six things that you can do to make 2016 the year of the thrifty monkey.
Start Tracking Your Spending
Knowledge is power. If you don’t know where you are at, already, it can be incredibly hard to change it. Whatever your current financial situation is, it is the direct result of the financial decisions you have made in the past. If you want to change your financial future, you need to understand the decisions you are makeing. Keeping a journal is a great option if you have the time and discipline. Another simpler way to track your finances is to use a program like PocketGuard that tracks it all for you.
However you want to do it, tracking your spending for one month can give you surprising insight into where your money is actually going. If you are struggling with credit card or other debt, you need to understand your spending habits before you can change them.
Understand and Improve Your Credit
Your credit report is like a university transcript of everyone you have done in the past. It keeps track of every missed payment, all your credit card debt and gives potential creditors an overall view of your credit worthiness. But it also show your payments you made ontime and debt that you have paid off.
A good credit report can save you thousands by lowering the interest rates you are offered as you demonstrate you are not a high risk borrower.
Check out your credit report and make sure that it is accurate. To check for errors or to find out what you might need to clean up, check out the official government sponsored site AnnualCreditReport.com, or get your credit score for free at Credit Karma or Credit Sesame.
Start an Investment Portfolio
If you don’t have an investment portfolio, now is a great time to start. Talk to the HR department at the company you work for to see if they have a 401(k) matching program. Many employers will match any investment that you put away, or invest in their stock program. If they match 25–50% of your contributions, it is literally free money to you. Just ask your HR department how to sign up.
Even without a matching program, putting money into a 401(k) is a smart investment, and a great way to save money on your tax bill.
Rebalance your Investments.
If you have an investment plan, it is good to review it every year to make sure that it stays balanced. Keeping your investments spread out between, long-term and short-term bonds and equities ensures that you more likely to weather financial turbulence.
If your investments have become a little heavy in one area, it is good to bring the asset allocation back into alignment with your goals. You can talk to your bank or investment manager to identify and address any areas of concern.
Start Gathering Tax Documents
They say that nothing is sure but death and taxes. If haven’t encountered the former this year, then you will need to deal with the latter. Tax day in 2016 is on Monday, April 18, leaving you less then 3 months to get things ready. The most common forms that people struggle with are:
- W-2– Income and withholding summary from employers
- 1099– Other income including contract, interest and investment income
- 1098– Common deductions including vehicle donations and student loan interest
As they are coming in, have a place that you put them, a folder or a special drawer. If you do your taxes yourself, you will have everything ready and if you are simply handing them over to your accountant, you won’t have to make multiple trips if you forget something.
Check Your Car
One of the larger expenses that you can easily save money on is your car. Simply changing the air filter and ensuring the tires are inflated can save you hundreds of dollars per year in fuel costs. If it has been a few years, it might be worth having it checked for emissions to further optimize the fuel efficiency.
Keeping track of your expenses can be difficult, but by using automated tool to track your income and categorize your expenses, you can keep yourself in the black to pay down debt or start saving money.
No two financial plans look alike, so whatever your goals are, taking the time to fully understand your financial situation, develop your own plan will help you set yourself up for financial success in 2016 and beyond. Just because 2016 is the year of the monkey, doesn’t mean you have to act like one too.
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