January is a good time to recover from the hectic holiday season and get yourself on track for the financial year ahead of you.
Below are 3 good steps to take to help you get your financial house in order for the New Year:
1. Organize Your Financial Filing System
If you’re like a lot of folks, the months of November and December always seem like one big blur. Everyone hurries to get all their projects and school exams completed before the Thanksgiving break. Then, after Thanksgiving rolls through, it seems like you’re half way to Christmas, which brings a whole new level of busyness in and of itself!
Essentially, what all of this hustle and bustle often results in is an Inbox full of receipts, financial statements, doctor visit bills, utility receipts, etc that need to be filed in your financial filing system.
Well, January is a perfect time to clear off that desk and get this stuff put away where it needs to be! Not only will this step improve your sanity, but it can ensure you know where all your records are in preparation for producing that data for tax return season.
2. Implement an Effective Strategy for Credit Card Debt Payoff
Another good action item to embark upon in January is implementing an effective strategy for paying off any high interest credit card debt. For example, if you have a manageable level of debt that can be paid off within 6-12 months, it might make sense for you to look for a new 0% balance transfer offer credit card.
Or, if you are having trouble meeting your monthly payments, it is good to stay in communication with the credit card company to let them know your situation vs. just staying quiet and then surprising them with a default later on.
3. Develop a Strategy for Investing Your Money
A last step to take during the first month of each New Year is to plan out your investment strategy for the year. For example, think about what tax bracket you will be in for the coming year. Once you have an estimation, you can then deploy a strategy for where to invest your money in tax-free (Roth IRA, Roth 401k), taxable (regular accounts), or tax-deferred (Traditional 401k, IRA) accounts. This will enable you to effectively manage your tax bracket both in the present day and also when you are in retirement.