I have not done much in the past to make sure that every part of my finances are in tip-top shape. I recently became financially independent (just graduated from college this past May), and I’m not sure where to begin. How can I start cleaning up my finances and making sure I stay financially organized?
–Recent College Grad in Boston
DEAR RECENT COLLEGE GRAD,
Now that you are on your own and you’re in charge of your own finances, there are a few ways to keep your finances neat and organized. If you haven’t already in the last few months, check your credit report from one of the three reporting agencies. Because each one gives you a free report, you can check every four months using a different agency. A new credit report allows you to check for reporting errors and remind yourself of accounts you may have forgotten about. You will also be able to better protect yourself against identity theft.
Once you have a list of all accounts, check each one and make sure you know when each one is due to be paid. If you miss your credit card payments by a day, you can face penalties and fees. By making payments on time, you’ll avoid unnecessary charges and penalty costs. If you have the funds and can do so safely, set up automatic payments on each account. This way, you’ll never miss a payment.
Now that you have all of the payments set up, check each account thoroughly. This is something you should be doing with every credit card statement anyway, but this is a good time to go through and make sure you haven’t missed anything. You could be victim to unauthorized transactions, which often appear as small amounts as so not to arouse suspicion.
Check any monthly recurring payments that you have set up for services. Are you still using those services? If you aren’t, you can cancel them and save yourself a bundle. This could be magazine clubs, unnecessary insurance, streaming services, or gym memberships. Look into changing your internet/cable plans to something cheaper, perhaps by cutting premium channels or TV altogether. You can work with your cable provider to find a package or introductory deal that suits your needs.
It’s also a great time of year to respect your financial areas and clean out your wallet and the desk where you pay your bills. Clean out old receipts or bills that might be cluttering up your wallet or desk. Before tossing the trash, however, make sure there isn’t personal information included on any of it. You don’t want to open yourself up to identity theft. However, you should keep bills for large purchases on file for insurance purposes.
The holidays are coming up, and planning your spending over the next three months will help make sure that you have the holiday that you want. If you don’t have a budget, create one – take note of your monthly expenses and compare that to your monthly income. If you do have a budget, make sure it’s current, especially if you created it more than six months ago. Maybe your car insurance payments have changed, or you’ve moved and your rent is lower. Keeping an updated budget is a good way to maintain your financial cleanliness.
Now is also a good time to look at your financial goals for 2015. The new year is only a few months away, and if there are any major purchases or savings you’d like to make next year, like a new car or a new house, you could calculate what kind of down payment you might need and plan accordingly. This way, you know exactly what you need to set aside each month in your budget to achieve your financial goals.
With your new budget, you’ll be able to figure out how much you can save per month. If you aren’t already, now is a good time to start putting money away into savings. Look into your local banks to see what your best options are for savings accounts. You should make sure to have an emergency fund that covers six to nine months of living expenses, just in case disaster strikes.
Doing a thorough examination of your finances should be done at least twice a year. Being as knowledgeable as possible about your financial situation helps you keep control and better manage your budget and savings.