It's always a good idea to have your finances in order. However, throughout the year, especially this last one, it's possible that you didn't always stay on top of it as well as you would have liked. And that's okay, because we're here to help you this tax season. It's the best time to force yourself to sit down and figure out where your money is. What's coming in? What's going out? You need to do it anyway to file your taxes, so why not add a few extra steps this year in order to make managing your money a cinch this year. Here are eight ways to help get your finances in order.
1. Gather Financial Paperwork
When you gather your financial paperwork, you should include credit card, phone, and utility bills, bank statements, insurance and mortgage payments, and any other financial debts and obligations that you are required to pay on a monthly or yearly basis. Determine what your financial obligations are so that you can make arrangements to pay down debt and/or reduce your overhead if necessary.
2. Create a Budget
A budget is the key to financial health—there's no way around it. It's quite possibly the most important one, once you gather all of your financial paperwork to see what you pay throughout the month. If you don't keep track of where your money's going and where it should be going, it won't take much for spending to get out of control.
It's also important to make it realistic. If you know you won't be able to quit ordering from your favorite restaurant or buying that cup of coffee in the morning, build it in and make sure it balances out with your other spending. You don't have to deprive yourself of everything that you love. Your expenses shouldn't simply be your rent/mortgage, groceries, utilities, life basics and car payments/transportation. You're certainly allowed to enjoy some things! You just need to be up front with yourself about how your spending works, and what you can afford to spend on things that aren't life-or-death.
3. Check Your Credit
It's easy to completely forget about your credit score. That is, until you're denied credit. Your credit history plays such a big role in so many areas of life. That's why credit reports should be reviewed at least once a year. If you have some work to do to get it up to snuff, this can help you work damage control into your budget. If you already have a healthy credit score, that's great! You can work toward maintaining that—or even making it better.
4. Think About Your Goals
Do you want to buy a house in five years? Are you thinking about settling down and starting a family with that special someone? Or maybe you know you'll need to buy a new vehicle in the next few years. When working out your personal finances, your long-term goals are super important. It's why we at StoneMor always stress the importance of pre-planning. The burden of cost is always reduced when there is a plan and a goal in mind. It's scary to plan and pay for a funeral when it's all of a sudden. It's nerve-racking when you need to purchase a brand new car after your old one left you stranded on the side of the road. These are things that you know will have to get done. So why not put a plan of action in motion and set some goals? The sooner you can start setting aside savings for these priorities, the more seamlessly it becomes part of your financial routine.
5. Save More Money
Number five is a fairly obvious one. However, when it comes to receiving your tax return or even your stimulus check, maybe you should think about putting it all away. Don't think about what you're going to buy now, but what you'll need to buy later. Resolutions to save more money are great but following through on them is even better. So start by narrowing your focus and setting a goal for the amount of money you want to save each month, or the amount you wish to have in a savings account by the end of the year. Then find a few small changes to your daily routine that could boost your savings. Pack lunch a few times a week. Cancel a subscription service you rarely use. Try to be more conscious of your water and electricity use at home. Whatever it is, direct the savings into an account where it can sit untouched.
6. Reduce Your Debt
Another difficult-but-necessary step in getting your finances in order is consolidating and paying down debt. It's not the sexiest thing you can do with your newly saved money, but your future self will ABSOLUTELY be thanking you. Here are some ways to help pay down your debt.
- Pay at least double the minimum payment plus the finance charge every month.
Transfer balances to one or two cards with low APRs to keep track of credit card debt.
Destroy or freeze your other credit cards that you don't use.
Use cash or debit cards instead of credit for all purchases.
If you don't have the cash on hand, don't buy it.
We all know the importance of having 2-to-3 months of income on hand in case of emergency, but in tight economic times it can be difficult to do. If you're really short on cash, try putting every five-dollar bill you get into a box, or even emptying all your change into a jar at the end of the day. Tricks like these do work and they will add up over time. Better yet, write yourself a check—even if it's only $25 or $50—every time you get paid and place it in a special account. Last year has proved to us that our financial stability can become very unstable very quickly. Sometimes having that box full of five dollar bills or the emergency account that's filled with $25 deposits can help us through the toughest of situations. We hope you never have to utilize such a thing, but as the old adage goes, "It's better to have it and not need it then to need it and not have it."
Nevertheless, by reading and acting upon all seven of these tips, your finances should be in order today, tomorrow, and the years to come!