With the year’s end fast approaching, it’s time to take the necessary steps so you’ll be financially ready to ring out the old and ring in the new with 2010. Here are some tips for cleaning up your 2009 money matters and streamlining your personal finances for the new year:
Pay off your short-term debts. Specifically, that means any money you owe on your credit card or borrowed from friends. Credit cards are both a convenience and a temptation. They give you the illusion that you can spend as much as you want—an illusion that’s shattered once you get your credit card bill. Worse, every month that you don’t clear out your debt is another month of interest piled up on top of it. Don’t take that burden into the new year! Use your 13th month pay and other year-end or holiday bonuses to pay off your debts. For tips on settling your debts, check out LoveToKnow.com’s article on do-it-yourself credit card debt settlement. If you have a large debt, use it as a cautionary tale to yourself and read up on how to make your credit card work for you, not against you.
Don’t go overboard for your holiday celebrations. Yes, Christmas is the time for love and giving, but there’s no price tag on love, and just because you love your friends and family doesn’t mean you have to splurge on every single one of them. Look for budget-friendly gifts. You can check out the Cosmo Gift Guide, which offers suggestions on below-P500 Christmas gifts. After the holidays themselves, make the most of your leftovers. Check out the recipes at LoveFoodHateWaste.com. Plug any money you save from celebrating on a budget into your savings account, or use it to pay off any outstanding debts.
Work out any tax issues. Gather and file any necessary tax forms you need: if you’re self-employed, it’s a good idea to consult with an accountant if you’re not familiar with the ins and outs of Philippine taxation; if you’re working for someone else, ask your company’s HR department if you need to complete any additional requirements before the year ends. Read up on Philippine taxes, at least enough to know what taxes apply to you and what, if any, income tax returns are due you—a good place to start is the website for the Bureau of Internal Revenue (BIR). Teach yourself how to compute your tax percentages. Remember, if you know what to expect, you can brace yourself financially to pay off any outstanding taxes or you can anticipate how you’re going to spend any money you get back.
Assess your personal profits and losses. Before you can work on improving your financial management for 2010, you need to look at how you managed your finances in 2009. Calculate your personal profits and losses to get a sense of whether or not you are living within your means and to see what areas you can cut back on in the next year. If your bank sends you regular printouts that show deposits and withdrawals for your account, look at these and try to get a sense of your money management patterns. You can go to your bank and request the statements if you don’t receive these regularly.
Set up a 2010 budget. Calculate your net worth and use your assessment of this year’s profits and losses to set up your budget for 2010. That means planning out the payments you know are going to be due each month, quarter, or half-year (such as rent, utilities, tuition, loan payments, etc.) and setting a clear budget for variables like groceries, entertainment, and so on. Adopt habits that will let you trick yourself into saving money and automate your finances by setting up an automatic savings plan. Use money trackers like Mint, Spending Diary, or Microsoft Money to make sure that you know where your money goes on a daily, weekly, and monthly basis.
For more essential year-end money moves, check out Gina Trapani’s article on Lifehacker.com.
What will you do to set your financial affairs in order? Share your tips and ideas! Leave a comment below or talk it up with other GIRLTalkers on our forum!
