Take These 5 Baby Steps to Get Your Finances Organized

Dollars & Sense on 01.05.12
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Photo: ezioman

After all the commotion of the holidays, and the rush-rush of starting up at work and school again, it's time for some peace. So curl up with your digital device and check out these do-able and simple ideas for getting organized -- and moving forward in your life.

1.  Open a Secret Tunnel in the Piggy Bank

Money tunnel
Photo: Lomo-Cam

New Year's resolutions to "save more money this year" are just too vague to be effective. Plus, they rely heavily on our having the willpower to leave unspent money, well, unspent.

The surest way to save money is to get the green stuff out of your hands (or checking account) before it somehow disappears. One way to do this is to sock away as much as you can into savings when the money arrives, then let yourself spend what's left however you see fit. This method, called reverse budgeting, is great for people who don't want to mess around with spending categories and limits.

Your baby step:  Set up an automatic monthly transfer from checking to savings, or see if your company will directly deposit your paycheck into different bank accounts. Open a targeted savings account at an online bank, like USAA or ING Direct, to make sure the money is more untouchable.

2.  Take the Blindfolds Off Your Wallet

Open wallet
Photo: Laura Brunow Miner

Tons of people have no idea where all their money is going. It just comes. And then it goes.

The best way to understand what you are spending on, and how much life costs in your part of paradise, is by tracking every penny you spend. Recording your costs is also a great way to transition from impulse spending to conscious spending. Knowing you can't just pretend you didn't buy those color-coordinated mixing bowls keeps you honest.

Your baby step:  Look through these suggested ways to track your spending and decide which method would work best for you. Either print it out, sign up, download, or buy a notebook -- and get started tonight.

3.  Pretty Up Your Business Expenses -- Fast

Forget all the crinkled receipts, scribbled notes, and awkward spreadsheets. If you have any kind of self-employment income, you'll love the ease of Outright, a free accounting website. 

When I finally started making money from my blogging efforts, I was relieved to find how simple and actually kind-of fun Outright is for someone as uninterested in bookkeeping as I. With one click, you see all your income and expenses zoom into full-color graphs and pie-charts. And everything is then organized when tax time rolls around.

Your baby step: Sign up for a free account at Outright. Enter just one or two expenses and payments to see how easy it is to get everything organized, and how satisfying it is to have a running tally of your bottom line.

4.  Take Two Quick but Powerful Actions Toward Retirement

Nest eggs
Photo: Douglas Lise

Retirement is either so far away for us that the idea makes our eyelids all heavy, or it's getting so close that we just want to stick our heads in the sand out of panic. Here are two actions that will take less than 1/2 hour of your time, and might just be enough for the whole year.

Your baby step:  Contact your work to increase your retirement deductions to the maximum allowable. (My husband just increased his from 10 to 15%.) Then call your bank and sock away another $5,000 into a Roth IRA. You have until April 15 for the IRA, but do it now.

5.  Treat Yourself Like a Child -- I Do

Bar chart
Photo: Tony Crider

You know why teachers use stickers and reward charts? And why churches use goal thermometers to raise money? Because they work. Study after study has found: what gets measured, gets done.

If you need to change your behavior and save money, you should try a little chart for yourself. I know I personally need cheerleading to stay on track when sacrifices are involved. That's why I created these savings progress charts, which were also used by the participants in TLC's Frugal Mama Makeover series.

Your baby step: Figure out one or two things you really want to save up for (or pay down) and how much you need. Print out one of these savings charts, post it on your fridge, and start coloring!

See, I told you this was going to be simple. Each of these steps should take you about 15 minutes. Some you can cross off your list for another year. Some mark the beginning of an adventure --  and you can't put a price on that.

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