Do you want to get your personal finances under control? If so, it’s time to get started.
Take a look at some ideas on managing your money from the planning experts at the Massachusetts Society of Certified Public Accountants and Bankrate.com.
Create a budget
A budget doesn’t have to be a complicated mathematical calculation.
Determine your income and expenses for each month by reviewing your checkbook, bank statements, and receipts from the last year.
Don’t forget that little things add up, so track what you spend in cash for 30 days. You’ll be able to see where your money is going and make the appropriate changes.
Check your credit report
Every consumer is entitled to a free report from each of the major bureaus — Experian, TransUnion, and Equifax – every 12 months under federal law at AnnualCreditReport.com for free.
Check each report carefully for any errors.
If you find a mistake or incomplete or outdated information, contact the agency by phone, in writing, or online to file a dispute. The dispute must be based on a report that is no older than 90 days.
Where can you be saving money?
Spending less is easier than earning more, so take advantage of every opportunity to save money.
Clip coupons, buy off-season, and avoid impulse purchases.
Don’t forget that small changes add up. Saving $2 a day at the vending machine puts $500 a year back in your pocket.
Where can you make other cuts?
Take a look at your cellphone or cable/satellite TV bills.
Bundle services for a lower monthly rate or cut back on channels and features you don’t use.
Find the fees
Are you regularly reviewing all your banking statements?
New fees from banks, companies, and services are being added regularly, and seeing the itemized statements may be the only way to catch them.
Regularly check where your money is going — fees often will be there in black and white.
Create an emergency fund
Unplanned expenses happen.
Whether it’s a trip to the emergency room, a car accident, or a layoff at work, having an emergency fund can save you from borrowing money when the unexpected occurs.
Experts suggest setting aside three to six months of living expenses for when you need it most.
Pay down your debt
Paying off a credit card charging 17 percent annual interest is equivalent to investing money with a before-tax, guaranteed return of almost 20 percent.
Use your cash for more worthwhile purposes than paying the credit card company.
A benchmark for how much of your personal income you should save is approximately 10 percent.
To boost your savings rate, set up an automatic deduction from either your paycheck or checking account to a high yield savings account.
Max out your retirement options
The earlier you start saving for retirement, the better.
If your employer offers 401(k) matching, be sure to take advantage of this opportunity for free money.
If you’ve already maxed out your 401(k), consider a traditional or Roth IRA. The maximum 401(k) and IRA contribution limit in 2014 is $17,500. If you are more than 50 years old, the maximum contribution is $23,000.
Make a will
No one likes to think about dying, but a will can ensure that your assets will be divided according to your wishes.
You will want to make decisions about who should have your power of attorney in case you are incapacitated.
Don’t let the government decide who will care for your family or how your assets will be allocated. This is also a good time to review your insurance coverage.
Extend the season of giving all year round by contributing something from each paycheck to a charity you support.
Giving helps focus on others and keeps finances in perspective.
Raise your tax IQ
Probably the most important, but under-planned, financial action for most people is related to taxes.
Whether it is your paycheck withholding or taking advantage of the $3,000 a year capital loss provision, you must plan year round for taxes. IRS.gov is a good starting point to maximize your refund.
Financial literacy equals financial freedom. For more help on making sound financial decision, check out the American Institute of Certified Public Accountants’ 360 Degrees of Financial Literacy website.