Whip Your Finances Into Shape This New Year

Whip Your Finances Into Shape This New Year

University of Illinois; Kathy Sweedler has nine tips to help consumers tackle their household budget.

For many of us, diet and exercise changes appear at the top of the list of New Year's resolutions. However, resolving to make changes in how we handle money will put our finances in better shape by next year.

University of Illinois Extension consumer economics educator Kathy Sweedler recommends adding financial tasks to your calendar just like you'd add going to the gym three times a week.

"Making time for physical exercise takes planning and discipline; so does keeping your finances in shape," Sweedler says. "I'm human, too. I let important tasks slip by, but a to-do calendar helps me get tasks accomplished, so why not add financial tasks to the calendar? Mark out time once a month to tackle your finances. Think about how good you'll feel in January 2013 when you review your resolutions and can say that your financial life is in better shape."

Sweedler suggests adding some of the following financial tasks to your calendar, many of which can be done in less than an hour. 

1. Write down your financial goals. Where do you want to be in a year, 5 years and 20 years?  How can your money help you get there?  It's much easier to manage our day-to-day spending when we are motivated to work toward long-term goals.

2. Save money. If you already have a savings account, consider increasing the amount you save for retirement.

3.  Update the security of your smart phone and/or computer. Make sure that your phone or your banking app is password protected, so that if you lose your phone, someone else can't access your account. For further security measures, your individual banks and/or cell-phone carriers should be consulted.

4. Calculate your net worth for a snapshot picture of finances. Add up the market value of all your assets (what you own) and subtract your liabilities (what you owe others); this is your net worth. Do this the same time each year to measure your progress toward saving for retirement.

5. Check your credit report for accuracy. One of the best ways to catch identity theft is to check your credit report. You can check your report from the three main credit bureaus for free, once a year, at www.annualcreditreport.com.

6. Do an energy audit for your home. An energy audit can pinpoint home-energy efficiency improvements that pay back year after year. Contact your local utility company for assistance.

7. Rebalance your investments. We need an appropriate mix of types of investments to meet our needs. Does your mix still match your desired portfolio in terms of liquidity, growth, and income? If not, you may need to take steps to rebalance these investments.

8. Review your insurance plans to see if any adjustments in coverage levels or who is covered needs to be updated.

9. Update financial documents such as wills, powers of attorney, and health directives to meet your current needs.

Free worksheets are available online as well as links to other helpful websites.

Visit http://web.extension.illinois.edu/cfiv/ce.html  and click on "Financial Tools" to get started on your financial fitness plan.

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