The new year has arrived, and this is the perfect time to evaluate your financial situation and tidy up your budget, bank accounts, debts and investments. Here are six ways to spruce up your finances:
1. Refresh your budget. If you've been promoted, transitioned from two incomes to one or 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 can adjust spending where needed to help you attain your financial goals.
2. 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 debt payoff plan specifically to pay off the debt you accumulated over the holidays. Cleaning up this debt quickly will put you in a much better financial position for the rest of the year. It's easy to fall back in to debt, so put a plan in place while you're at it to maintain a zero balance.
3. 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 and can even help prevent identity theft. Secure your online bill payment with strong passwords that you change 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 payments as "recurring" so the bills are automatically paid. This can help you avoid forgetting to pay a bill, and it keeps countertops paper-free.
4. 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, get a 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 aren't 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.
5. Set up an emergency fund. Life is full of unexpected surprises. A car repair, illness or unemployment can catch you and your family 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.
6. Dust off your financial statements. Review your bank and credit card statements as well as bills to make sure you're not being charged fees you don't recognize or paying for subscriptions or services you never use. This is also a great time to look at your insurance policies. Some personal finance tools expose fees that are often hidden on statements or buried in the fine print to help you eliminate unnecessary fees and save more money.
Whether it's putting money aside to pay down debt, planning for the future or just getting organized, the new year is a great time to change up your financial habits.
See original article in DailyFinance.
