At the beginning of the year, things can get pretty hectic and financially overwhelming. People usually go into the season confident that they will stick to their budgets, but a lot of them wind up overspending with a lot of credit card bills that need to be paid off. So how do you avoid such circumstances? Well, one thing is certain – you need to plan ahead and simplify your finances. With these 5 steps, you will clean up and clear out the old year and enter a new one with your budget still intact.
What you don’t need – get rid of it
Everything begins with the paperwork. Yes, it may be dull and tedious, but you just have to get it done. At least there will be a lot of shredding because all of the unimportant papers is something you definitely need to get rid of. Say goodbye to your bank statements over a year old, credit card offers, convenience checks, ATM receipts once the transaction appears in your account, pay stubs after paying your taxes and quarterly investment statements after acquiring the year-end statement.
On the other hand, keep your seven years’ worth of tax returns and any supporting documentation, active contracts, records of sale investment, home improvement records and disputed bills. Just remember, all your finances must be arranged accordingly because they give you a clearer picture of your current state.
Deal with your accounts
People tend to have a lot of credit cards. A lot! Add 5 to 6 of them, plus the debit cards, account savings and investment accounts; and you get to deal with almost 20 different accounts altogether. This is what you might call a complicated financial life. On top of that, god forbid you have the same password for all of them. Close the accounts you don’t need, simplify things and increase your fraud protection this way. Aim to close the recently opened ones and create a strong password that only makes sense to you.
Cancel your services
By checking your regular recurring expenses, focus on cancelling those which you do not use. You can also play it smart. Just pretend that you want to cancel by contacting the vendor and bringing up your intentions in order to see how they will react. Do this fearlessly, reduce your rates, negotiate, or if things do not work for you – simply cancel your services.
Make a yearly financial plan
By planning ahead you can predict your future expenses and set aside the funds for them. Think about your holidays, birthdays, vacations and maintenance such as car repairs and home improvement. It is the sensible thing to do, because you will have more control over your budget. Always set aside for the ‘just in case’ situations, too. Also, if you have kids, schooling can cost you money, but with School Easy Pay you can find simple solutions throughout the year, every year. Even though you may not know the exact amount of money needed for such annual planning, still it is better to either use your existing savings account or open up a sub-account in order to prepare yourself, rather than to let things slide.
Automate whatever you can
Every month you should choose an amount of money that you can commit to putting away. Do this only if you are certain that this set-aside doesn’t disrupt your monthly financial needs. That is why it is good to set up an automatic transfer from your checking to your savings account. This way you can increase your retirement contributionsif you haven’t hit the maximum. Maybe if you want to invest, you can set up a manageable automatic investment from your checking account. Also, put the fixed recurring bills on auto-pay so that you won’t miss any of them. The key is to be fast. Focus on the short-term goals, set a deadline to update your budget and commit yourself with calmness and determination to get things done properly.
