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How to simplify your finances in the New Year

Financial journalist Stacey Tisdale, author of “The True Cost of Happiness: The Real Story Behind Managing Your Money,” has a few simple tips to help you stay on top of your dollars and cents in 2008.
/ Source: TODAY

Do you always resolve to organize your bills, pay off your debt, and save more money, but just don’t know where to begin? Financial journalist Stacey Tisdale, author of “The True Cost of Happiness: The Real Story Behind Managing Your Money,” has a few simple tips to help you stay on top of your finances in the New Year.

Set goals
Nothing will simplify your finances faster than focusing on your most important goals. Set specific goals like “I want to save $1,000 and take my wife on that dream vacation” or “I want to put $75 a month into my child’s college fund.” Ideas like “I want to save more” and “I want to invest more” are vague and overwhelming.

A great way to stay connected to your goals is to put your budget on the refrigerator or on the wall where everyone can see it. It’s important to list your goals right at the top.

For example, my husband and I want to go to Paris this summer. I keep a picture of the Eiffel Tower in my wallet right next to my credit card. I have a friend who wants to save $5,000 this year for her child’s college education. She keeps a picture of him wearing a cap and gown where she used to keep her credit card.

These things motivate you to make smarter financial decisions that will make things easier down the road. Another way to make our financial lives simpler is to hold a good old-fashioned monthly family meeting to make sure that everybody is on the same page when it comes to money.

I know some people are thinking they can’t get their kids to sit down for dinner, let alone a monthly meeting. Tell them you need to talk about the money they will have to spend. You’ll be surprised by how they suddenly find time. These meetings allow you to reconnect with them and share your goals. You can let family members know what is expected of them when it comes to financial contributions. You can address challenges before they turn into problems. Set a regular date, and designate someone to take notes. That will help you avoid confusion at future meetings.

Organize financial documents If your family cannot find the information they need when they need it, you have put them in the most complicated of all financial situations. Let them know where things are, where your finances stand, and if you have any special desires for your money. This is a good time of year to do this because a lot of us are getting our financial documents in order as we prepare for tax season.

Consolidate your accounts
If you have a lot of financial accounts, it’s difficult to keep track of them, and therefore difficult to figure out where you stand financially. I know people who have had five different jobs and have five different 401(k) accounts. They have no idea of what they have accrued in retirement savings.

Cut down on credit cards
If you have credit card debt, use only cash or debit cards until your debt is paid off. Each transaction is making your life more complicated and expensive.

None of us needs more than one credit card unless we have an additional card for business. The Federal Reserve Board has a Web site that will help you pick a card that is right for your needs. For example, if you pay off your bill each month, you don’t necessarily need a card with the lowest interest rate.

Automate your financial transactions
I urge people to get their bills, saving and investment money automatically deducted from their paychecks or bank accounts. Your bank and your employer should be able to help you set up everything you need. It’s important to remember, however, that online accounts are still managed by people and therefore subject to error. So it’s up to you to check on your financial transactions and make sure that they are correct.

See a financial professional The days when managing money meant putting some of your savings in the stock market are long gone. Financial planning has become a complicated business. There are different investment options, saving options, estate-planning options, the list goes on and on.

Getting professional help can relieve your worries about money whether you have a little or a lot. If you are looking for a planner, the Financial Planning Association can help you find one in your area. You can expect to spend between $100 and $200 for a one-hour session.

Also, look at the areas where you need help. For things like investing and debt reduction, you may just want to find a specialist.