It’s that time of year again…that’s right, a NEW year, which means it’s a great time to take a pulse check of your finances. Answer the questions below to see how ready you are to take on the world this year! (Oh, and need a little help? We’ve got that, too…).
Do you have a plan for saving each month?
A) I put a certain amount of my paycheck away each month.
B) Sure, I save some, but I spend more.
C) Plan? What plan?
It is so important that you put away money each month, even just a little. If you are ever in an emergency situation, you’re going to need some emergency cash. Sign up for your bank’s automatic savings plan, which will drop a set amount of cash into your account each month (you don’t even have to see it!). As far as the money youdo spend goes, use it efficiently. Arrange your budget into an A, B, and C list: A’s are the must-haves, like rent and groceries, B’s are the add-ons, like cable or a gym membership, and C’s are the wants, like clothes and dining out. You probably don’t need us to tell you which categories should factor into your budget the most, but the key is to make sure that your C-list spending doesn’t surpass your saving.
What are your spending habits?
A) I try to be conscious of what I spend. I usually only buy what I need.
B) I go shopping here and there, but mostly for things on sale. I do spend money, but I don’t overspend.
C) Shopping is my #1 hobby.
Try this exercise to keep your spending in check: For your next purchase, think about how many hours you worked for the amount that you’re going to be spending. So if you make ten dollars an hour, and you’re buying jeans for $70, are you willing to work 7 hours for a pair of jeans? It’s easy to just swipe away on a credit card without realizing how much you are actually spending, or how much value that item has when compared with your overall productivity. If you even think twice about an item, put it down and walk away. If you’re still thinking about that item (say, an awesome new handbag) a few days later, then set your sights on saving for it gradually. That way you won’t feel deprived, but also won’t blow your dough on every single thing you see.
In order to get a work out in…
a) I have a gym membership. And yoga studio package. And punch card at Lululemon.
b) I run outside and pump my iron at home.
c) I get off the couch, walk over to the fridge, and repeat.
If you can’t afford a gym membership (which can get costly), try a pay-as-you-go package, offered by many large gym chains. These plans let you purchase gym passes in packages of 10 or 20, so you’re only paying for the days you actually go (and you can stop going anytime). Not really a gym kinda gal? There are tons of iPhone and iPad apps that serve as great workout buddies, like Workout Trainer, Nike Training Club and DailyBurn. These apps will keep you on track and motivated when you’re working out from home — for free!
How much is your rent?
A) This place is a steal!
B) Eh, I’m getting by.
C) This joint is wiping me out of money!
First of all, your rent should not cost more than half of your paycheck. Period. Looking for a new place? Go in with roommates to split the costs with you, such as cable, Netflix, and all other utilities. Look for apartments on lower floors, and inward facing (since those “rooms with a view” come at a premium!). Be sure to ask which utilities are included and which aren’t, and then plan your usage accordingly (that means you, A/C sleepers). Finally, pay attention to the apartment’s proximity to useful things, like public transit, the grocery store, and the bank. You don’t want to end up spending money you could be saving just getting from Point A to Point B.
Is your student loan debt under control?
A) I have yet to miss a payment.
B) I had to defer a few months ago but am now back on track.
C) I’ll worry about it later.
Keep track of the lender, balance, and repayment status for each of your student loans. These details determine your options for loan repayment and forgiveness. Do you know your grace period? A grace period is how long you can wait after leaving school before you have to make your first payment. Different loans have different grace periods, but this doesn’t mean it’s a free pass for spending. Instead, use this time to save up so that the first few payments don’t hit your account so hard. Whatever you do, do not ignore your student loans. Pick away at paying them back — even if it’s a seemingly small dent at first.
Do you keep a record of your expenses?
A) I keep track of every penny I spend.
B) I am somewhat aware of what I have been spending, but I don’t keep a record.
C) Does that drawer full of receipts count??
Since you have more control over what you spend than how much you make, it is important to keep a record of your expenses. (Psst: print our Easy Peasy Expense Tracker — it lives up to its name, we promise!). Record everything you spend your money on for a month, including those sneaky extras like your Netflix membership and monthly mani/pedi. This will make you more aware of your spending habits so that next month you’re better prepared to stay on budget.
Are you an at-home diner, card-carrying Seamless Web aficionado, or Open Table regular?
A) I love to cook. It saves money and I get exactly what I want!
B) I eat in most of the time, but have to have my daily latte at Starbucks.
C) My fridge is storage space for sweaters.
We get it: the last thing you want to do when you get home from a busy day at work is cook. Make up some meals for the week on Sunday (lasagne and pasta salad are good bets and easily divided into individual portions). That way all you have to do is pop it in the microwave and you’re done. We also recommend buying healthy snack foods like nuts and dried fruit in bulk; if you always have something healthy on hand you’ll be less likely to overspend on food (or consume needless calories). As for that daily latte, hey — we give you full permission. If you’re making most of your meals at home, this small indulgence is a good way to keep on track while boosting your productivity.
Are you ready to file your taxes?
A) I have my forms from my employer and salary information organized in a folder and TurboTax up on my computer screen!
B) I’m still waiting on a few forms but should be set for filing by April 15.
C) The thought of filing my taxes gives me hives. Do I have to?
As your tax forms pile in the mail or become accessible online start saving them to a file on your computer. Remember, if you have a savings or checking account that didn’t bear more than $10, a form might not have been generated (always check with your banking institution if you’re not sure). Unless you’ve opened a new bank account, retirement vehicle, or stock account you should have the same forms as last year. Using your prior year tax return serves as a great benchmark. New to filing? Make a list of all jobs, bank accounts, stocks traded/held (1099-INT forms), properties, and anything you make payments on (mortgage, student loans, extensive doctors bills, etc.). If you still feel like something’s missing call H&R Block or use Turbo Tax’s free live tax advice to go over these forms and have them ask you a couple of questions to determine if you’re including everything. Use this list every year and update it as you open new bank accounts, etc. so that by the time April 15th rolls around you’re already ahead of the game!