10 ways to organize your financial life


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Editor’s note: This story originally appeared on Living on the Cheap.

Do you spend too much and save too little? Don’t even know where your money is going? If yes, then it’s time to put your financial life in order.

Even if you’re doing well financially, this is a good time to take a look at your savings, spending, and operations to see what can be improved. Do you have life insurance, disability insurance, health insurance, and a college fund for your children? Is your portfolio customized the way it should be for today’s market? Do you make enough money to cover your living expenses?

Keeping your financial home in order is an ongoing process—much like keeping the home you live in clean. Some front-end organizations increase the likelihood that you will be able to achieve your financial goals.

Here are 10 things you can do to get your financial life in order in the new year or anytime.

1. Maximum 401(k) of your contributions

401(k) retirement nest egg
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You definitely want to contribute what it takes to get the most out of your employer because it gives you free money. (Where else can you get that kind of ROI?) But don’t stop there if you are able to contribute more.

In 2021, employees can contribute $19,500 (plus an additional $6,500 if they are 50 or older) to 401(k) retirement funds. Self-employed people should contribute as much as possible to retirement through methods such as IRAs and SEPs. “If you’re not reaching the limit, add a percentage,” says Liz Weston, a personal finance columnist and author. “Just set it up and get to work.”

Find planning for retirement confusing? Here are seven types of retirement savings accounts you might consider.

2. Submit a Will and Review Your Estate Planning

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Nobody wants to think about death, but you don’t want to leave your family in trouble if something happens.

Create an estate plan and be sure to designate who will take custody of your children, who will inherit your property, and who will make decisions for you if you become incapacitated.

Then make sure your family knows where to find this information as well as your other financial information, including passwords for online accounts. That’s right – you also need to plan your digital ownership, from your Facebook account to your intellectual property rights. New online tools make it easy to collect all your information in one place.

3. Increase your savings

Hafez Saeed
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If you’re putting $50 of each paycheck into savings, push it back up to $55 or $60.

Change your IRA contribution from 10% to 11%. By making modest adjustments, you won’t miss out on money, and you can set up an emergency fund, retirement savings or kids’ college funds.

Weston advocates creating savings buckets for specific expenses, such as a new car, vacation, home renovation, or emergency fund. Some banks will allow you to create sub-accounts to facilitate this. “It’s very nice to know that these expenses have been covered,” she says.

4. Automate your savings

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We all think we should save more money, but the truth is, few of us do. One of the easiest and most effective ways to increase savings is to automate the process.

This could be withholding money from your paycheck and depositing it into a savings account or scheduling regular transfers from checking to savings or retirement accounts.

If the money is withdrawn before or right after you receive your paycheck, you won’t have time to spend it before you can get rid of it.

5. Create a budget

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It’s hard to plan if you don’t know where your money is going. Creating a formal budget also makes it easier to set and then reach goals.

You can make an old paper budget, use a spreadsheet, or use an app or computer program.

6. Organize your money

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If you’re still doing tax planning by dumping receipts in a shoebox, maybe it’s time to improve your process.

This can include using online or computer bookkeeping software, automating bill payments or creating a process that enables you to see your income and spending more clearly, such as using a program like Quicken or an online tool like Mint.com.

7. Ask for discounts

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Call your cable company, mobile phone service provider, auto insurance provider, and any other services for which you pay a monthly fee and ask if they can give you a better deal.

Cell phone and cable packages change all the time, and companies won’t offer you a better plan if you don’t ask for it.

If you pay private real estate insurance on your home and think you now have more than 20% of the equity, ask that it be removed, suggests Carrie Rocha, founder of Pocket Your Dollars.

8. Pay off debts

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Are you still paying off student loans? Do you have credit card debt? The sooner you pay off debt, the sooner you can invest this money in achieving future goals. In addition, you will pay less interest.

Also, take a closer look at how you can get into debt. “Credit card debt is very expensive,” Weston says. “It’s a sign that you’re living beyond your means.” Make a plan to change your bad spending habits, clear debt for good and stay out of debt in the future.

9. Make your charitable deductions automatic

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Weston says this is good for charities, which need money all year long, and also helps you to be more in-depth in giving.

It allows you to plan and maximize your charitable work. Plus, it’s easier for you to remember your deductions at tax time.

10. Pay your bills on time

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Any money that goes into late fees is wasted money, and late payments can hurt your credit score. If you lose bills, set up a system that will enable you to pay them when they are due.

This can include setting automated reminders on your calendar, signing up for alerts or setting up automatic payment options using bank accounts or credit cards.

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