Before you Christmas shop for everyone else this year, take care of your financial self by tackling these money moves. Put them at the top of your list, and then you can really have fun shopping.
All 8 of these ideas are practical, fairly simplistic, and necessary to ensure you have a firm footing financially, as you move into the Holiday season this year. Use this time to actually get your personal finances together prior to the holiday season. Christmas is much sweeter when you have your personal finances in order. Consider these 8 things to be YOUR personal Christmas gift to yourself and your peace of mind. Your family will benefit tremendously, also!
1. Figure your net worth. Find out what you owe, and what you own. Net worth is simply your assets minus your liabilities, and hopefully, not the other way around. You are hoping for a positive number here.
2. Create written plan to attack your debt. Once you write down what you owe, start thinking of ways to pay down your debt. This adds to your net worth. First look at your monthly income vs. your monthly expenses, and second, see what money is left to pay off debt. Also, look for ways to generate more income to pay off debt. You must have a plan to eliminate your debt.
3. Get an emergency fund. Even if it's just $500 or $1,000. Don't attempt to get a full 3 to 6 months, initially. Just liquid cash that is enough to fix the refrigerator, repair the radiator in your car, or replace the washing machine....just something, to start!
4. Develop a well written budget that expands and deflates monthly, depending on the things you know are coming up for each month. So the monthly budget is flexible, but it's written and every dollar is accounted for. Develop it and put it in place and in practice. If there is more than one of you working these steps, then be sure to agree on it! This is where you will set your Christmas budget. A simple list of names and dollar amounts next to each name. Period. Nothing fancy. As you make out your budget, put aside a small amount of money on gifts for loved ones. Simple and quick.
5. Get life insurance. Life insurance is the greatest gift you could give your loved ones that depend on your salary! If you buy Christmas gifts for your kids, but don't have a life insurance insurance policy in force, you've got your priorities backwards and looking for temporary satisfaction, without understanding the importance of long term well being. Business first, toys and games come second.
6. Visit your Human Resources department at your job and discuss your number of allowances affecting your withholdings, and your retirement contributions. If you are claiming 5 dependents, but have 2 people in the household, and you get a huge tax return every year from the IRS, change your withholdings. You want all of your money during the year on your regular paychecks. Large tax returns are you telling the government to hold all of your money and give it back to you in March of the next year. All the while, your money gains no interest, and due to inflation, it's worth less when they give it back to you in the form of a tax return the following year. Get your money when you earn it. Secondly, be sure you are contributing the company match to your 401k or 403b (or whatever retirement plan your employer has). Don't leave free money on the table, especially since you are about to go spend your hard earned money on gifts.
7. Tell everyone you are on a budget. Inform every one expecting a gift that you are focusing on you or your families financial future, and you are diligently and wisely following a Christmas budget (which you formulated in the step #4 above). Don't feel guilty, have the courage, and change your way of thinking. Expensive gifts are for people with lots and lots of extra money. If that isn't you, don't sweat it, and tell everyone around you not to sweat it.
8. Resolve to take complete control of your money BEFORE the "New Year", before you make any resolutions, and well before you go out and buy Christmas gifts!