Tidying Up Your Finances
Special to The Truth
The cultural phenomenon
sparked by professional organizing consultant Marie Kondo
has motivated millions worldwide to declutter. While
cleaning out your closet and making a financial plan may be
two very different things, tidying up your finances can also
“spark joy.”
A Certified Financial
Planner (CFP) can help you commit to a plan that helps you
take control of your spending, providing you with confidence
today and a more secure tomorrow.
Here are 10 ideas to get
you started:
1. Write down your
financial goals and post them somewhere prominent, such as
your fridge. These can be small goals, like “I will bring
lunch to work three days a week,” or bigger goals, like “I
will pay off my student loan.”
2. Calculate your net
worth to get an overall picture of your financial standing.
Your net worth is everything you own minus everything you
owe.
3. Update (or create) your
budget showing what money is coming in and what’s going out.
Make sure it’s not in the red, meaning you’re spending more
than you’re earning.
4. Consider opening a
Christmas club-type savings account to pay for big-ticket
personal expenses. Originally pioneered during the Great
Depression, Christmas clubs were financial accounts people
added cash to throughout the year. They then used these
savings to buy holiday gifts, helping to avoid the holiday
spending “hangover.” You can create your own by automating
savings each month, ideally in an interest-bearing account.
If you save $75 a month, you’ll have $900 over the course of
a year (or even more, if you earn interest).
5. Start gathering tax
documents like W-2 and 1099 forms and receipts for
charitable contributions. Taxes are right around the corner.
Do them early if you can.
6. Check your credit
report. With Credit Karma, you can check your credit reports
from TransUnion and Equifax for free weekly. Additionally,
you can check your report from each of the three main credit
bureaus once a year for free with AnnualCreditReport.com.
7. Set a deadline to pay
off credit cards in full. This will help motivate you to
take control of your debt.
8. Rebalance your 401(k)
about once a year to see if you are out of balance from your
original goals. For example, if your allocation was 60
percent stocks and 40 percent bonds, but stocks had a good
year, you might now have a 65 percent stocks and 35 percent
bonds allocation, so this will have to be rebalanced.
9. Increase your savings
plans. This could be your employer plan at work, your own
emergency fund, or both. Consider raising your contribution
by 1 percent a year.
10. Meet with a CFP
professional. If you haven’t begun planning for retirement
or tying your financial goals to your life goals, there’s no
better time than now to start. You can find a CFP at
letsmakeaplan.org.
As you put your belongings
in order, consider your finances. Simple measures can help
you tidy up your finances.
Courtesy StatePoint
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