Mid-week Morsel: New Year, New Budget

The new year is a great time to organize your budget and finances.  Here are four ways you can take control of your money.

Track expenditures:  The one tip that help me get our budget under control was knowing where our money actually went.  Use your banks online budget feature, a budget program, a spreadsheet, or just a good old fashioned ledger to break down each expense into it's true category.  The trick is to use something that allows you to split expenses into multiple categories.  (When I did this years ago, I used Microsoft Money.)  For example, you might have spent $57 at the gas station.  However, only $40 of that was for gas, $15 was for food and drinks, and $2 was for a newspaper.  Not breaking down this expense might lead you to believe you're spending a lot more on gas than you really are, and would also hide just how much you really spend on extras like snacks.  I'm not suggesting that you break down every expense for the rest of your life, just for a month or two so that you can see your true spending habits.  You'll be amazed at how much money you spend on the little things, and how quickly they can wreck your budget.  Because you shouldn't have to spend money to save money, About.com has a list of free money management programs for you to check out.

Out of Sight = Out of Mind:  It took years for my husband to get me in the habit of checking our bank accounts every single day; even when we had not used it.  It wasn't that I was refusing to check them, I simply forgot.  Then I discovered Mint.com.  It's a free website from Intuit that tracks all your accounts (checking, savings, retirement, loans, credit cards, etc.) using one login.  I bookmarked the site and added it to the top of my browser so I saw it every time I was online.  Now that I have a smartphone, I use apps from my financial institutions and have alerts set up to text me when certain events take place, such as an unusually large purchase or my account balance dipping below a certain level.  Using online banking and apps help keep our money situation right in front of me all day so that I can't help but keep track of it.

Hidden Costs:  Now is a great time to take a look at your accounts and subscriptions to see if you are getting the most for your money.  Look at things like phone, internet, and cable plans to see if the package is really the best fit for your usage needs.  Are there added features you don't use, but are still paying for?  Cut them out, and put that money to better use.

Taxes:  The start of a new tax year makes this a great time to review your withholding.  If you typically owe taxes, adjust your withholding so that more is taken out.  If you typically get a large refund, adjust your withholding so that less is taken out.  Some people enjoy getting a large refund, and count on it for large purchases.  If you are one of these people, keep this in mind, you can easily adjust your withholding so that more money goes to your paycheck, then have that money automatically transferred to a savings account.  This way, not only do you have the large amount of money at tax time, but you also have the interest earned on that money.  Letting the government hold your money allows them to earn that interest.  Visit efile.com and use their withholding calculator to find out if you should make changes to your W-4.

Okay, so my mid-week morsel is more like a 3 course meal this week.  I just didn't want to leave any ideas out.  How about you?  Do you have any tips or ideas for taking control of your finances?

Karissa