Your Financial Foundation for 2012

Happy New Year!

Have you made your New Years resolutions yet?  For most of us, the resolutions begin on January 1 and fizzle out somewhere around the afternoon of January 19th.  During this time, the gyms are packed, with new members lingering on the cross-trainer during peak times, not wiping down machines and packing exercise classes.  Others start the year on a cleanse, diet and/or alcohol-free, and then realize that’s no fun.  By the end of the month, many of our resolutions have been kicked to the curb and we’re back to our old carb-heavy, red meat-eating, martini guzzling, once-a-month-at-the-gym habits.

But it doesn’t have to be that way.  The act of making resolutions comes from our desire for change–especially positive change that pushes us towards a better version of ourselves.  However, as we all find out every year, change doesn’t happen merely because we want it to happen, or because we make a resolution and say it out loud.  Change happens when we start with a plan, stay focused on our goal, push aside our bad habits and not give into excuses or laziness, and stay the course.

One of the most popular New Years resolutions people make is to get their financial house in order and start saving.  But before any change can happen, it’s important to establish a foundation.  What’s the popular phrase??  You don’t know where you’re going unless you know where you’ve been…..Or something like that.   Here are some tips for establishing a smart financial foundation that can get you ready for financial success in 2012:

1. Get organized.  Get your bank statements, credit card bills, school loans and other monthly bills together.  Organize them by bank/credit card and by month and then file them away.  Start preparing for tax season; the sooner you organize and clear away last year’s bills, the sooner you can start to organzie for 2012.  Do it this week.

2.  Get ready for tax season.  If you itemize and keep receipts, make sure you have your 2011 receipts organized and filed away so that you can easily access them come tax time.  Make sure you have also kept track of possible personal deductions and have the receipts–such as charitable contributions, travel expenses for work, costs associated with job interviews, co-pays for health care and doctors visits, mortgage interest, etc.  Do it this week!

3. Go online.  Make sure you have you can access your bank acounts online, and that you can pay your bills that way as well.   I know it sounds so 2002 but many of us still don’t do our banking online and/or have a few bills that we have not yet connected to our bank accounts.  Take the time to connect your bills with your bank accounts, and  make sure you have some kind of overdraft protection whether through a line of credit account or credit card that is attached to your checking account.

4. Automate payments.  Again, very 2002, but it’s worth mentioning.  Most credit cards, loans and utilities offer auto-pay; that is, you can authorize the bank to pay a specific amount to each credit card everry month from your checking account, whether it’s the minium payment or a specific amount.  In that way, bill payment is automatic and you’re less likely to miss or delay a payment.  Later, you can always go back and make an additional payment but at least your minium payment was made without any hassles.

5. Clean out your closets!  Seriously!  January is a slow month, it’s cold, most of your friends are off alcohol, dessert, meat, etc. and will probably be at the gym for the first 2 weeks, so it’s a good time to complete some projects around the house. I cleaned out my linen closet, bathroom cabinets and desk drawers today and what a difference it made!  I dumped a bunch of old receipts, bills, cards and notes, and recovered some treasures too.  I found a gift certificate for a massage that I had forgotten about, 5 blank cards for various occasions, a bunch of notepads, a $20 bill, some great lipstick shades and bottles of nail polish that I overlooked since last winter, and tons of beauty products I can still use.  It’s a simple idea and maybe a little bit of a drag, but if you space out the cleaning (ie. clean one closet a day), find that old Prince CD and pump up the jam, it won’t be so bad!

Start the year off right by establishing a financial foundation, and get yourself geared up to tackling your New Years resolutions!

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