Here are ten healthy steps to take in the New Year to make sure that you move in the right direction with your personal finances:
Review and set financial goals: Each year it is critical to review any financial goals from the previous year and determine what was accomplished and what still needs to be addressed. It is just as important to set your new financial goals.
How much money do you want to save in 2010?
What do you want to improve: spending, income, investment returns, etc?
Do you need to get yourself more organized financially?
Review your monthly bills and credit cards: Take a look at your monthly bills to see where you can cut costs. The bills that should be regularly shopped are cell phones, home phones, television, internet service, and gym memberships. Review each of your recurring monthly bills to see if there is an opportunity to save some cash. Even small amounts can create dramatic savings.
Consider credit cards as a convenient way to pay your monthly expenses: The additional benefit can be rewards offered from the credit card company. Travel miles, cash back, gift cards are just a few of the great rewards offered. Shop around to see which rewards make the most sense for you in 2010 with no annual fees.
To stay on track with a sensible financial plan, pay off credit card bills each month.
Build your emergency cash reserve: It is vital to your financial well-being that you have 3–6 months worth of cash on hand in a liquid savings or money market account. If you do not, make it a priority in 2010 to build this cash reserve. This will ensure if you are hit with an unforeseen expense or lose your job, you will not have to dip into your retirement accounts right away to cover your monthly shortfall.
Review your budget: Review all of your monthly expenses in 2010 and see if there is any fat to trim. Cut any expense out of your budget that is no longer applicable to your life, for example, cancelling an unused gym membership or magazine you never read.
Review your insurance: Life changes. Are your insurances still appropriate? Do you need more or less insurance on you or your family? Do you have disability insurance? Is now the time to purchase long-term care insurance? It is important that these issues are reviewed annually to avoid paying too much or carrying too much risk.
Rebalance your portfolio: This is one of the most overlooked, yet important aspects of investing. At least once a year you should rebalance your portfolio to bring it back to its original allocation.
If you wanted to be 50% stocks and 50% bonds and last year the market had a very good year moving you to 60% stocks and 40% bonds, sell enough of your stock position to move yourself back to a 50/50 allocation. This will not only ensure that your portfolio isn’t more risky than you originally intended, it will also allow you to buy low and sell high.
Do an inventory of old investments: Many of us have investments we made years ago, put into our filing cabinets, and never looked at again. Now is the time to take them out and make sure they are still appropriate. Make sure your money is working as hard for you as you are working for it.
Increase your 401k Contribution: Some of you may have received a raise this past year, if so, perhaps now is a good time to increase your 401k contribution, even if only a little. A small gradual increase in your 401k contribution will supercharge your long-term savings and have very little impact on your lifestyle.
Clean out your financial filing cabinet: Keep your financial life organized. Clean out the filing cabinet that holds your financial documents once a year. Throw away tax returns over seven years old, old fund prospectuses, paystubs or brokerage statements that are no longer required. Make your files simple and accessible by purging them once a year.
Review your will and estate planning docs: It is crucial that you review all of your estate planning documents regularly. Things change, life evolves and so do we. What we wanted a few years ago for our heirs may be very different from what we want today. It should not take you more than an hour to review your will and any other estate planning documents you have in place to make sure your original intent is still applicable today.
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Source:http://www.dummies.com/how-to/content/ten-financial-steps-to-take-in-2010.html
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