Although New Year’s Day is known for resolutions, don’t wait until January 1st to commit to your financial future. Whether you dread tax day, or don’t know what an IRA is, here are five pointers to clean up your finances and stay informed right now.
Get Your Credit Report
If you haven’t checked your credit report in the past year, be sure to get a copy. Checking your credit report every year is the best way of catching any possible identity theft. The three credit reporting agencies are Equifax, Experian, and Trans-Union and you should get a report from each agency. Copies of your credit report are free, simply fill out a form and print it out online.
Once you have your report check each line for accuracy. Don’t just check for accounts; also check to make sure the balances are accurate. Keep in mind that some accounts you have might be under the parent company name, not the name you are most familiar with. Any inaccuracy you find should be corrected. Write to the credit reporting agency with specifics of the account and why you believe it is wrong.
Meet with a Financial Planner
Even if you feel as though you don’t have enough money to manage, meet with a financial planner. A good financial planner can help you accomplish all of your financial goals, ranging from getting out of debt to saving for retirement.
Make a list of questions you have before you make an appointment to make the most of your time. Also make sure that you know what your long term goals are. This will affect the financial planner’s recommendations. For example, if you want to retire early a financial planner will recommend a more stringent savings plan than if you plan on working until retirement age. The financial planner will also want to know what kind of life you envision after you retire, as this will also affect your saving goals.
Also, consider the other people in your life while making financial goals. Work out any differences of opinion with your partner about your future before you get to the financial planner’s office. The financial obligations you have towards your children and parents in the future are also important things to discuss. Although these subjects might be unpleasant, they are important issues to address before they become problems.
Start Your Taxes
If April 15 is a source of anxiety and stress for you, consider starting your taxes now. Designate a file or envelope where you will put all tax documents. On the outside of the envelope or file start a list of questions you have. When you meet with an accountant or sit down to do your taxes, you will know what issues you have to address. Also ask or look for strategies to avoid excessive taxation, like giving to charities and claiming income credits for the next year.
There is also no reason to wait until April to do your taxes. Once you have all the forms you need, normally at the beginning of February, start working on your taxes. Most people receive a refund from the IRS. Submit your taxes early and invest your refund or use it to pay down your debt. Whenever you submit your taxes, make sure you save a copy of the completed forms in case of an audit.
Make a Will
No matter how much money or how much debt you have make a will. Although there are D.I.Y will forms, it is best to use a professional. Ask family and friends for a recommendation for a reputable attorney. Keep in mind you will have to name an executor for your will, someone that will be responsible for carrying out the terms of your will.
Once you make a will, be sure to put in a safe location and tell someone where it is located. Without a will, the state can seize your house and any other assets you might have, leaving your loved ones without any recourse in the event of your death.
No matter how dedicated your financial planner is you are the person that will be the strongest advocate for your financial future. Knowing the basics of the financial world makes it easier to keep commitments to pay down debt and save for retirement. Splurges on cars and vacations are also guilt free when you know you have the money to indulge.
Relying on a spouse to take care of the family finances can also be a possible pitfall. In case of an emergency, be sure you know how to manage the finances of the household. Insist on knowing where important documents are kept. Whether you are single or part of a couple, not knowing what an IRA is or how to create a workable budget is easily rectified. Reading articles or books, or even enrolling in a class is a minimal investment for knowledge that can yield untold dividends.