Organizing finances is a New Year’s resolution on many people’s minds right now. It’s likely right behind exercising more and losing weight. It can be easy to start strong in January only to lose momentum after a few weeks, when the enthusiasm wears off and real life sets in.
Developing a system that keeps your finances organized all year long can take some trial and error. But putting the work in now can help you create a plan that works all year long.
Review 2022 finances
When the ball drops every January 1, it is tempting to jump right in and overhaul your entire life. But before downloading the latest budgeting app or creating a complicated system to track receipts and bills, it’s important to spend a little time reflecting on the past year.
Understanding what went well and where there’s room for improvement can give you insight into habits that might need to change or patterns you can repeat to help you succeed.
Track your spending
Start by looking back at your spending over the past year. If you already have a budgeting tool, like an app or software, that you use regularly to organize your finances, you might have access to spending breakdowns or graphs to help you understand where your money went.
If you don’t currently use financial software, downloading the free version of an app like Mint may be worth it to make seeing your data breakdowns easier. Some banks and credit card companies also offer spending breakdowns, which can be helpful if you use only one card or account for most purchases.
If you like to go old school, review your bank and credit card statements from the last couple of months. Use a spreadsheet to put the individual purchases into larger buckets like necessities, eating out, shopping, etc. Then compare those numbers to your overall spending and income from last year.
Look for clues once you have last year’s finances organized
When you have the actual numbers in front of you, start to look for patterns. It can be helpful to spend time journaling and looking at your spending in the larger context of your life.
Did you have any significant financial wins or losses? What else was happening around that time that might have influenced your spending?
You may find that you overspent on travel because you could finally go on vacation again after two years. Or maybe you had a significant home or auto repair that took a chunk of your emergency savings. On the other hand, maybe you got a promotion, or your side hustle did well. Your income increased and you were able to max out your 401(k) or Roth IRA (go you!).
Knowing why you spent or saved the way you did can help you understand what pitfalls to avoid next year, or what you should be doing more of in 2023 to help you succeed.
Write out your 2023 goals
After you think about what you spent last year and why, create a list of financial goals for 2023. Reflect on how you want to feel about money in the coming year. Use those feelings to help you establish and prioritize your objectives. Think or journal about things like:
- Are there things you can do to feel a sense of power and agency around finances?
- What would make you feel peaceful and financially secure this year?
- What actions can help you achieve these feelings?
Your goals might include paying off debt, increasing your emergency fund and retirement savings or increasing your credit score.
From your list, start to break each goal into small, manageable and concrete steps to help you make progress. For example, if you want to start or contribute more to your emergency fund in 2023, consider opening a high-yield savings account and setting up auto transfers from every paycheck.
Making sure you have a road map can eliminate some of the fear and guesswork around organizing your finances. When July rolls around, and you’ve lost momentum or are unsure how to proceed, you’ve already laid out the next steps. Now you just have to follow your road map.
Tackle your debt
Paying off your high-interest credit card debt is an excellent goal for 2023. Many methods can help you get rid of debt. Choosing the right one is about what works best for you.
The debt snowball works for some people because it can help you get an early mental win by concentrating your extra payments on the lowest balance you owe and paying it off quickly. You’ll still make minimum payments on the rest of your debt and continue working on the next lowest balance until you eventually pay off your highest card balance.
Other people advocate for paying off the highest-interest debt first and working down the list of credit cards until the card with the lowest interest rate is finally paid off. This might help you save money since you’ll pay off the higher interest rate first, but you might not see early wins, depending on how much you owe.
Whatever method you choose, it’s most important to find the plan that works for you and stick to it until the debt is gone.
Let technology help you organize your finances
Once you establish your goals and the steps you need to take to reach them, you can build a system of automatic savings and calendar reminders to help keep you on track all year.
Use your calendar to organize finances
Block out time in your calendar each week to review your financial goals and see your progress. Be sure to block out the time on your calendar so that nothing gets in the way. Consider creating a separate calendar or using a specific color for financial reminders.
Add notes, tasks, or reminders to your calendar to help you remember to:
- Review your retirement accounts. If one of your goals is to increase your retirement savings, set up an automatic bump to your monthly contribution now so that you don’t have to think about it for the rest of the year. If your employer offers to match a percentage of your 401(k) contributions, be sure you contribute at least enough to get the entire match. Otherwise, you’re leaving free money on the table.
- Schedule or complete home and auto maintenance. A great way to save money is to handle preventative maintenance before things break. Add monthly or quarterly home or auto maintenance reminders to help you avoid problems. Set a yearly reminder to change the batteries in your smoke and carbon monoxide detectors.
- Review your subscriptions. It can be easy to think that $8 or $10 a month doesn’t matter much. But if you have five services charging you $10 a month ($50 total), you could be spending $600 a year without even noticing it.
- Shop for the best rates. Block out an afternoon or schedule a vacation day that you use to make the financial phone calls that you’ve been avoiding, like getting new insurance quotes, finding a better rate from your cable company, or setting up a meeting with your financial planner or accountant.
- Check your credit report. It’s essential to check your credit report at least once a year and keep an eye on your credit score. Not only can you catch fraudulent charges and reverse them faster, but you can also see if a mistake was made by one of your creditors and get it fixed before it brings down your score.
Consider keeping a running checklist of the bills or fees due monthly, quarterly and yearly, so you aren’t surprised.
You don’t have to do all of these things every week or even every month. But having reminders in your calendar for check-ins can help you save money and ensure your goals stay on track.
Coordinate with your family members
It can be tricky to merge finances with another person, which is why coordination and communication are key. If you share finances with your spouse or significant other, include them in your reminders or create a shared calendar. That way, you can each see the complete financial picture and help the other person stay on track.
Bottom line to organize your finances
Getting financially organized at the start of the year can help ensure your priorities are aligned and your money works for you. Reflect on what did and did not go well last year and decide what you want to tackle in 2023. Focus on the concrete steps you can take to achieve your goals. Set reminders for yourself now to help ensure a bright 2023.
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