Organizing Finances in the New Year

It’s a new year and the time is right to begin organizing your finances.  In addition to all of those other resolutions, financial planning can be a resolution you begin today.  Here are some helpful tips to begin organizing your finances.

Begin by finding some place that is quiet with little distraction.  Then take an in-depth look at your budget.  Perhaps there are things that you do not use and can get rid of this year. Also compare services and consider making a change to a cheaper provider.  When planning a household budget a good rule of thumb for splitting up your budget is as follows:

  1. Home expenses: 35 percent
  2. Transportation expenses: 15 percent
  3. Paying off debt (if you have any): No more than 15 percent
  4. Savings: 10 percent
  5. Miscellaneous: 25 percent

After you have worked out a budget, go through the papers in your home and decide what to keep and what to get rid of.  It is not necessary to keep everything.  Typically, you should keep tax returns for seven years, but receipts can be pitched at the end of each month.  This type of organization is something that should be worked on throughout the year.  It is recommended that you maintain a separate file for taxes from previous years.

Finally, be sure you are getting the most out of charitable giving.  Cleaning out your home of old clothes or unwanted items and donating them can increase your charitable deduction.  Getting your finances organized can help free up your time to focus on those other resolutions you’ve made for 2014.

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