While you don’t have to wait for January to start working on your finances, this is often a great time to try a new approach. If you’re thinking of making some changes, you may be wondering where to start. Here are some ideas for optimizing your finances.
Clean up your bank accounts
If you have multiple bank accounts, make sure they’re all necessary and doing their job. If you have extra accounts that you no longer need, consider consolidating them. There’s no need to have checking and savings accounts at multiple banks unless you’re actually using them.
Get free checking
- Minimum balance fees: Many banks will charge you if you have less than a certain amount in your account. Requirements vary from one bank to another, so make sure you know it for yours.
- Overdraft fees: While charging for overdrafting is fair, the amount that many banks charge can be insane. Did you know that you can avoid overdraft fees entirely with ING Direct? Instead, they offer an overdraft line of credit and charge a small amount of interest when you use it.
- ATM fees: ATM fees have risen to $2-3 for out of network use, and you’ll often get charged by both the ATM owner and your own bank. These fees can quickly add up, so shop around for a bank with low or no fees and/or ATMs where you need them.
- Fees for online billpay: These fees are less common than they used to be, but some banks still charge a fee for using their online billpay service.
Double check your recent bank statements to find see if you’ve been incurring any of these fees. If you can’t get your bank to waive these fees, then switching banks might be your best option.
Are you saving enough?
Automating your savings is one of the keys to financial success. But have you really though about much money you’ll need for various expenses? To figure things out, you need to sit down and list your needs and goals. Here are some ideas:
- Emergency fund
- Vacation fund
- House down payment
- Medical expenses for the year
- Car replacement fund
- Baby fund
- College savings fund
- Retirement fund
Every family will be different, as everyone has different goals. You may not want to be homeowners, or maybe travel isn’t a priority. Whatever your list looks like, it’s important to sit down and hash things out.
Spruce up your paycheck
Another good thing to do at the start of each year is to take a close look at your paycheck. Is your tax withholding right? Are you being paid what you’re worth? Can you think of other ways to earn extra money?
Look at your W-4
If you receive a tax refund, you should consider adjusting your withholding for 2011. While you’ll reduce your tax refund for next year, you’ll get more money in your pocket each pay period.
At the same time, you should set up (or adjust) an automatic savings transfer to make sure you don’t squander this “extra” money.
Ask for a raise
It may seem counterintuitive to ask for a raise when economy is still stumbling, but you should still take a close look at your circumstances. If you’re underpaid relative to others in a similar position, you should consider asking for a raise – especially if your employer has successfully weathered the economic storm.
Before talking to your boss, you should get your ducks in a row. Make a list of successes you’ve played a role in, and progress that you’ve made over the past year or so. You need to make a compelling case for why you’re due for a raise. You might not get as much as you want, but you’re unlikely to get anything if you don’t ask.
Make money on the side
If you’re having trouble making ends meet, you should consider moonlighting. It doesn’t matter if you wind up freelancing some of your professional skills, tutoring, or even delivering pizzas. What matters is that you earn some extra income to fill the gap.
Now… I’d love to hear about your goals for 2011. Have you started working on your finances for this year? What’s your biggest financial goal for 2011? What steps are you taking to reach it?