The beginning of a new year is the perfect time to organize and update finances. Many of us have experienced changes through the previous year. But we have neglected to update important information. Now is a great time to get our financial house in order in preparation for the coming year.

Check your beneficiaries. Have you had a child? Have you gotten married or divorced? You should check that your beneficiary designations are correct. This includes brokerage accounts, certificate of deposits, and other investments. Remember to check your will to make sure that it reflects any new changes in your life.

Update your W-2 forms. You may need to add a dependent. Beyond that you want to consider how much is being withheld. You may have received a large refund last year. Adjusting your withholding to take out less for taxes will let you use that money now instead of letting the government gain interest on it. A good use for that extra money is an emergency fund or investment.

Organize your tax papers. Yes, tax season is several months away. But the earlier you start, the easier it will be to get your taxes done. Have a file to collect any tax papers and make sure you receive every form you need. This saves last minute stress and anxiety.

Start an emergency fund. Times are hard, but an emergency fund is invaluable. The true benefit of such a fund is its ability to help you avoid more debt. An emergency fund lets you pay for those emergencies that life throws our way. This is another thing that can reduce stress.

Contribute to your 401K or IRA. Both a 401K and an IRA offer great tax advantaged ways to save for retirement. They offer huge benefits. Try to contribute if you can. Already contributing? See if you can increase your contributions. A good practice is to take a raise and put it into this kind of investment.

Review your budget. The start of the year is the perfect time to review your budget. You can take a look at what worked and adjust what didn't. Don't have a budget? Consider starting one. A popular budget involves using envelopes labeled with your expenses. You cash your paycheck and fill the envelopes with the amount you need for the week/month. When the cash is gone, you stop spending. Categories can include rent/mortgage, food, utilities, etc. If you pay by a check or credit card, simply slip in a piece of paper with what you allot minus what you spent.

Pay down debt. Put a plan in place to pay off debt. This can be as simple as planning to pay an extra five dollars on one credit card. It may seem hard to pay off that debt, but each small step will get you there.


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