Top Five Financial Steps to Take in the New Year

Weekly Challenge – Tidy Up Your Finances

The New Year provides opportunities to clean away the old and welcome the new in a variety of ways. I like to take time during the month of January to empty the closets, clean away the cobwebs, and reorganize.

While I usually think of doing these tasks around my home, it’s important to remember that finances can use some restructuring as well. Our financial situations change along with our jobs, families and the economy in general. Join me in tidying up your finances in these five ways!

Stay Focused

Financial responsibility takes discipline, which can be difficult at times. Making financial goals can help maintain focus where motivation is lacking. For me, this is in the form of saving for a minivan. The idea of paying cash for my future minivan helps me stick to a budget, achieve my saving goals, and go to work when I don’t feel like it.

This short-term goal is also combined with longer-term plans, like saving for our kids’ college years, our retirement funds, and an emergency savings account. “Setting financial goals helps keep you focused on a bright future,” according to Damon Winter, a financial management specialist. “These goals help you remember why you’re working so hard, especially in our current economy.”

Track Your Budget

Budgeting is a necessary task, but I found it difficult when I first started. Looking back, I think it was due to making a budget and then trying to fit my financial situation into that structure.

Instead, take some time to simply track the money that you spend each month. On a simple spreadsheet document, list your regular monthly bills and make categories for the rest of your expenditures, like Saving, Groceries, Entertainment, Household Repairs, Gas and Auto Repairs and Dining Out. Then write down everything you spend, no matter how small or big.

Make Lifestyle Changes

After a few weeks of tracking the money you spend, it will be easy to see where adjustments can be made in your lifestyle to achieve your financial goals. Reflecting on the different categories of your budget, determine what needs to be added or taken out.

Just because you've always spent money on something doesn't mean you need to continue. Review your credit card agreements and past bills, taking note of the current percentage of interest. If it's too high, call and ask for it to be reduced. Review your bills for services like phone, internet, insurance, and investments. This is a great time to evaluate what changes need to be made in the areas where you spend money.

Stay Out of Debt

One of these lifestyle changes may involve getting out of debt. About three years ago, I scoffed when my husband said he wanted us to live debt-free, but with planning and hard work we’ve been without debt ever since. It’s totally worth it, especially in this uncertain economy. Whether you decide to tackle the smaller debts and go from there or attack the highest-interest debt first, make a small goal and get started.

Once you’ve rid your budget of debt, it’s important to keep living debt-free. A few months ago, I was considering going into debt for a purchase, and after careful thought decided against it. I remembered the stress associated with the payments and I decided to save up instead.

Make the Most of Your Savings

As the weeks go by, set aside an amount of money that you can save on a regular basis. This is an important step to build a habit of saving, whether the amount is just $5 each time.

As saving money becomes part of your financial routine, begin thinking of savings as pots of money in different places that you can access during various times in your life. One of these special pots might be an emergency savings account that’s separate from other accounts, while another might be a retirement account with a higher long-term rate of return. Financial professionals like these who specialize in investments can help with these more sophisticated options.


written by: Kelly Wilson

Kelly Wilson is a busy mom and freelance writer who lives with her family in Portland, Oregon.

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