Dear Readers, Determined to get your financial house in order this year, but feeling overwhelmed at the thought? You're not alone. Use this checklist to get started -- and keep it handy to mark your progress throughout the new year.
The new year is a great time to review your finances, refresh your goals and maybe set some new priorities. Getting a handle on your finances can seem daunting, especially if you try to do it all at once. However, if you take it one step at a time -- and share the journey with your spouse, partner or family -- you might actually find that it's a rewarding experience in many ways.
The following checklist can act as a starting point for your thinking and open the door to family discussions on spending and saving, the attitudes you share and how to resolve differences of opinion. It can also provide a framework to help you take practical action based on some real facts and figures.
Use this financial checklist to stay on track
--Get organized. First, take a look at your recordkeeping. Do you know where all of your important documents and statements are? Could you streamline by keeping some records electronically? Next, make a list of all your accounts and where they're located. Consider consolidating them to make things simpler. Also make a list of your advisors with names and contact information. Finally, put important dates on your calendar. In other words, estimated taxes, property taxes and any Required Minimum Distributions from retirement accounts.
--Review your net worth. This simply means writing down and adding up what you own (your assets) and then subtracting what you owe (your liabilities). Are you in the plus or the minus? Knowing your net worth will help you decide next steps for saving, debt reduction and budgeting. It also gives you a way to measure future progress.
--Write down your goals. What do you want to accomplish financially this year? What about in five or 10 years? Having realistic goals will help you make smarter saving and spending decisions, balancing current needs and future desires.
--Refine your budget. With your net worth and goals in front of you, take a serious look at your budget. Add up your income, itemize your expenses (both essential and discretionary) and do the math. If you're coming up short, you'll need to prioritize. Decide where you can cut back if necessary. No matter what, make savings a line item on your list of essential expenses.
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