Wednesday, December 26, 2012

29 End of Year Financial Tips

A new year will arrive in less than 72 hours.  Many people have made a list of New Year’s Resolutions? I hope that one of your resolutions is to improve your finances even if you are good with managing your money.  Finances are a monumental part of your life.  Finances can destroy relationships; result in divorce, arguments, sadness, depression, anxiety, fear, health issues and unemployment. Finances must be properly managed which requires eradicating bad spending habits.  

Make a promise to yourself that you will do at least one thing to become better at managing your finances in 2013. A financial goal should be a positive statement, i.e. I will pay off my Visa bill by March 2013 instead of an uncertain or negative goal such as, I hope I can pay off my Visa bill by March 2013. Here are 29 end of the year financial tips to improve your finances in 2013 which will help you save money, improve for your retirement goals, get organized, and reduce stress and give you peace of mind and plan for the year ahead. 

  1. Change Your Mindset.  Change the way you think about money. If you believe you will always be in debt or always be broke you will.  Be grateful for what you have, it could be worse.
  2. Develop a Plan (Budget). Write a list of your entire total monthly expenses including debt and write down your total monthly income after taxes.  If you do not have any money left over (at least 10% of your monthly income) look at the areas where you can reduce spending. 
  3. Pay with cash. Pay for purchases with cash until your credit card balances are paid in full. If you pay for an item with a credit card you end up paying 2-3 times the original cost of the item. 
  4. Spend less.  Reduce spending by 30-50% each month. You should always have extra money left over each month after you pay your monthly expenses; if you don't,hange your spending habits. 
  5. Save. Do at least one thing a week to save money, i.e. bring your lunch to work, buy generic brands or bring coffee from home at least one day a week.  
  6. Plan for the unexpected. Create an emergency savings fund to cover all of your monthly bills and expenses for 9-12 months. 
  7. Get Out of Debt. Get current on any late payments. Negotiate with creditors to setup payment plans and pay off all debts. Keep debt (excluding rent/mortgage) at 15% or less of your net monthly income (after taxes). 
  8. Ask for help. Request a financial hardship for debt owed if you cannot afford to send the minimum monthly payment. 
  9. Limit Credit Card Usage. Use your credit card for emergencies only.  Keep credit card balances at 20% or less of the credit limit. Pay balances off at the end of each month or make multiples payments each month. 
  10. Fix your credit. Order a copy of your credit reports at and fix any errors. 
  11. Avoid filing for bankruptcy. Use bankruptcy as a last resort for large amounts of debt. 
  12. Develop What If Scenarios.  List different financial scenarios that could happen and how you would handle each one, i.e. job loss, sickness, death, new baby, loss of health insurance or other benefits, car repair, etc. 
  13. Get Your Financial House in Order.  Organize financial papers and store in a centralized secure location. Backup financial documents and records saved on your personal computer.  Make copies of all personal documents and store in a waterproof fire proof safe. 
  14. Get insured. Make sure you have adequate health, auto, life, disability and long-term care insurance. 
  15. Keep money in your pocket. Do an annual check on your heating system. Insulate your attic. Automate thermostat settings and use the lowest setting. Seal drafts and cover floors to retain heat. Open blinds during the day to let heat in. 
  16. Use direct deposit for paychecks.  Open a checking account with overdraft protection. 
  17. Create a will. Create a will to ensure your children and/or other family members are cared for after your death. 
  18. Know the law. Know the financial laws in your state for foreclosure, bankruptcy, dvorce, child support, retirement, debt, etc. 
  19. Update information yearly.  Update beneficiary, bank account, credit account and other account information such as loans. 
  20. Automate. Pay bills online to prevent late payments, late fees and damage to your credit. Setup automatic withdrawals to contribute to a savings account. 
  21. Diversify. Control your risks by investing in various mutual funds that are a combination or low, medium and high risk to limit your losses and maximize gains. 
  22. Reconcile. Balance your checkbook and write down every transaction, including check card or debit cards transactions and trips to the ATM. 
  23. Setup a debt payoff plan. Setup a debt payoff plan to prioritize your bills. Identify any terms and negotiations you would like to make with each company and stick to the terms. Start by paying off the smallest bills first, then use the money paid towards a previous bill and apply it to the next bill and continue this process until all your debts are paid. 
  24. Don't transfer balances.  Transferring balances to another credit card may lower your credit score and there may be fees associated with transferring the balance. Pay off the full balance before the introductory rate special ends because after the introductory rate ends the interest rate will increase dramatically. 
  25. Get current on student loans. Get current on student loans or request a financial hardship, forbearance or deferment until you are able to make the minimum monthly payments. 
  26. Plan for the future. Open a retirement account and save at least 10% towards your retirement each month. You will need 70-80% of your pre-retirement salary for a minimum of 20 years to have enough money during retirement or at least $1,000,000. 
  27. Consult a professional.  Contact a financial advisor or financial planner to help you determine your financial goals, where you want to live, the age you want to retire and the lifestyle you would like to have when you retire. 
  28. Know your worth.  Know your net worth (assets - liabilities). Verify your net worth annually. Know how much you earn, how much you owe and how many assets you have. Your net worth should increase on a yearly basis. 
  29. Don't stop at retirement. Don't just plan for your retirement, plan for your children's retirement. If you plan for your children's retirement or your grandchildren's college education this will ensure you have more than enough money to retire and enjoy your golden years.


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