10 Essential Tasks for the New Year

When is a better time to start frugal habits and set savings goals than the beginning of a brand new year? (Answer: There is no better time!)

Here are 10 essential tasks for starting your New Year on the right financial foot:

1. Plan now for next year’s holiday shopping

While the holidays are still fresh in your mind, record all of your holiday spending. If you have your receipts, save them in an envelope labeled, “Holidays 2007.” This can help you in two ways: 1) You are guaranteed to know what you bought for whom and avoid repeated gift ideas, and 2) you’ll know exactly how much celebrating can cost. If you don’t have your receipts, check your bank statements for debit purchases or simply estimate expenses on a piece of paper. Don’t forget to include non-gift items like party supplies, food, travel and gift wrap.

If you’re unconvinced whether it’s worth it to bother planning 11 months in advance, ask yourself this: Did you spend more than you planned this time around?

2. Write down your primary goal for this year

Many people make (and almost as many break) New Year’s resolutions. Instead of casually declaring resolutions, go a step further and write down one specific goal. It can be related to your financial goals or another area of your life. Imagine where you want to be one year from today and write it down so you can refer to it next year. Make your goal as specific as possible so you’ll know what you need to do to meet it and next year you’ll know for certain if you succeeded. Make your goal a realistic one, otherwise you could get discouraged and give up. Keep your written goal in a place where you will see it regularly. You can certainly have more than one, but limit yourself to no more than five goals so you don’t lose focus.

3. Avoid more debt

It is especially important this time of year to avoid credit, payday loans and cash advances to pay off your holiday debt. Make it a priority to not accumulate more debt in these first few months of your new year. Create a budget, track spending closely, and sacrifice nonessentials before even considering a payday loan, title loan or a cash advance. These loans are expensive and title loans could cost you your car.

4. Get a jumpstart on taxes

The IRS always encourages early filing for taxpayers, despite the fact that most taxpayers wait until the last minute. Filing your taxes can be a long and complicated process and even tax-savvy consumers can get confused amid the plethora of complicated and ever-changing tax codes. Rushing to complete your form, let alone locate necessary documents, just before the April 15 deadline means that you are more likely to make errors. Plus, some experts are predicting this may be a slow tax year, even for early filers.

So, start collecting your records now (including w-2s and 1099s); get forms you need on the IRS website; consider e-filing, which gets you your refund faster and provides confirmation that your form was received; and use direct deposit, which also makes the refund process faster and easier. If you have questions or run into problems, call the IRS at 800.829.1040.

5. Find new ways to save money

Bank of America offers a “Keep the Change” program which rounds up your debit card purchases and throws the difference into your savings account. It makes balancing your checkbook much simpler and lets you save about $10 to $20 (depending on how much you use debit) a month without even trying.

Use this strategy yourself. Find new ways to save money this year. Throw more money in your change jar at home or throw an extra 10% per month into your set-aside account. When extra income comes in, it is too easy to find something to spend it on. You may be surprised how well you can make due if you never see that extra money.

Bankrate has a great article with lots of money-saving ideas.

6. Say goodbye to at least one budget-robbing habit

Review your spending and question your habits. Is there one budget-robbing expense you can do without? Is this the year to quit smoking or limit alcohol consumption? Can you forgo the gourmet coffee and still enjoy your mornings? Have you always meant to pack a lunch instead of eating out, but never bothered to take the time? Try this year to say goodbye to one insidious habit that drains your cash flow like a leaky faucet.

7. Track your spending on other “suspect” habits that may be draining your dollars

So you’re not ready to give up cigarettes, coffee, drinks, shopping, dining out four times a week? That’s fair. But until you are, find out exactly what you spend on the vices you can’t quite quit. You may be amazed at how much motivation can come from knowing how much they cost.

8. Adopt the “wait-a-week” policy

Limit your spending by adopting the “wait-a-week” policy. Anytime you want to purchase an item for $100 or more, wait one week before making your final decision. Even if you are sure you want it, even if it’s something you need, make it a rule to wait at least one week to be absolutely sure.

9. Get organized

Why wait until spring to start your spring cleaning? Studies indicate that an orderly, clutter-free life can lead to less stress, which can result in fewer health problems. Many of us are too busy with work, family and other obligations to constantly keep our homes organized, but the benefits may really be worth the time.

According to one new survey, the number one reason people feel disorganized is due to a messy home. In your efforts to reduce the stress in your life and maintain your peace of mind, don’t overlook the condition of your home.

You know your needs better than anyone, so treat yourself to something fun that will motivate you to stay organized. At least consider a new organizer, day planner or a fancy pen for your to-do lists. Orderly life has its benefits, especially when it comes to being frugal. For some unique organizing tips, check out this Chicago Tribune article.

10. Avoid resolution failure

Why do most resolutions fail? Because they are poorly-planned declarations instead of well thought out, attainable goals. You must have a plan in place if your resolution has any chance of lasting the year. When determining your resolutions, follow the SMART acronym: Specific, Measurable, Attainable, Realistic and Timely. With such a well thought out resolution, you will be able to track your progress and maintain your motivation throughout the entire year.