Personal Finance Advice

As the New Year quickly approaches, many people decide that the time has come to make some resolutions involving getting their personal finances in order.  Resolutions generally stick when you have a detailed plan.  For example, making the resolution to simply get your finances in order probably won’t stick unless you come up with a comprehensive plan to take the steps you need to take in order to actually accomplish your goal.  The less vague you are with your resolution, the more likely you will actually encounter success.

If getting your personal finances in order is among your list of New Year’s resolutions, come up with a list that will lead you to eventual success.  Here are some ideas for items to put on your list:

Keep up with your record keeping.  For some people, the problem isn’t the lack of income, but rather the lack of handling the income properly.  If you don’t know where your money is going then you need to make the resolution to start tracking your money.  How much money do you bring in, and where does it all go? You’ll manage your money much better if you get a firmer grip on it.

Pay down your debt, or pay it off entirely.  This is a popular resolution, but it’s one that people rarely follow through on.  If you are going to pay down your debt substantially then you need to have a precise plan.  Work out a budget that allows you to put extra money toward your debt and figure out what debt will get paid off first.

Build up your savings.  You already know that you should have some money set aside in case of emergencies, but sometimes it’s difficult to actually make the effort to set funds aside when there are so many other demands on your money.  It’s easier to build up a viable emergency fund if you decide exactly what your savings goal is instead of simply making the resolution to build up a savings account.

Donate more money.  It’s a good idea to have a detailed plan for your giving.  How much do you want to give? Do you want to give an actual percentage of your income, or is there simply a certain amount you would like to make sure that you donate monthly or annually? The more detailed your plan, the higher your likelihood of success.

Take the time to sit down and outline your personal finance resolutions for the year.  Be as detailed as you can be, and be realistic.  You can’t hope to pay down $25,000 in debt within the year if you make $28,000 annually before taxes.  While you want to be as detailed as possible, an unrealistic personal financial resolution plan will more than likely fail when it becomes obvious that it isn’t feasible.  It’s far better to pull together a plan that is doable instead of putting something together that will force you to pinch pennies all the time. Don’t force your behavior to change too rapidly because it may prove to be too much to deal with.

Who know? Maybe 2009 will be the year when you get your personal finances in order!