The beginning of a new year is the perfect time to organize your finances. Whether you aim to save more, plan for big purchases, or simply streamline your budget, setting the right foundation early in the year can make all the difference in achieving your financial goals. Now is the time to reflect on your financial health and make any necessary adjustments.

Review your budget (or make it work for your busy life)

A solid budget is the cornerstone of financial health. Take time to review your income and expenses from the previous year to identify areas where you can cut back or reallocate funds.

If you skipped budgeting last year but know you need it, start fresh with a simple approach. Use a method like the 50/30/20 rule: allocate 50% of your income to needs, 30% to wants, and 20% to savings and debt repayment. Alternatively, try a budgeting app that makes tracking easy and fits seamlessly into your busy schedule. For extra convenience, set up automated transfers to savings and bill payments to keep your finances on track without extra effort.

Set SMART financial goals

What do you want to achieve financially this year? Transform your aspirations into SMART goals: specific, measurable, achievable, relevant, and time-bound.

• Specific: Define exactly what you want to accomplish, like saving $3,000 this year
• Measurable: Break your goal down by month (or by paycheck)
• Achievable: Ensure your goal is realistic given your resources and circumstances
• Relevant: Align your goal with your broader financial objectives
• Time-bound: Set a deadline to create a sense of urgency

Audit those subscriptions and monthly expenses

It’s easy to lose track of recurring subscriptions and services, but these can add up over time. Review your bank and credit card statements to identify charges for services you no longer use or need.

Cancel unnecessary subscriptions and look for opportunities to negotiate better rates on essential expenses, such as your internet or insurance premiums. These small changes can add up.

Check your credit report

The start of the year is an ideal time to pull your free annual credit report from each of the three major credit bureaus: Experian, TransUnion, and Equifax. You can access these reports at AnnualCreditReport.com, a federally authorized website.

When reviewing your credit report, take the following steps:

• Check for inaccuracies: Look for errors in your personal information, account details, or payment history. Even small mistakes can impact your credit score.
• Spot signs of fraud: Pay attention to unfamiliar accounts, hard inquiries you didn’t authorize, or suspicious activity that could indicate identity theft.
• Confirm your credit utilization: Ensure that reported balances match your records to avoid surprises that could harm your score.

Reevaluate your insurance policies

When was the last time you compared insurance rates? Life changes, such as a new job, marriage, or home purchase, can impact your insurance needs. Review your policies — including health, auto, homeowners, and life insurance — to ensure you have adequate coverage.

Shop around for better rates or bundle policies to save money. Additionally, consider whether you need additional coverage, such as disability insurance, to protect against unforeseen circumstances.

Review and adjust your tax withholdings

Review your tax withholdings at the start of the year to ensure they align with your financial situation. If you received a large tax refund last year, consider adjusting your withholding to increase your paycheck. Conversely, if you owed taxes, you might look at altering your withholding to avoid a similar outcome.

The IRS offers an online tool called the “Tax Withholding Estimator” to help you determine if your current withholding is on track.

Conduct a financial security audit

Protecting your finances from fraud and cyber threats is increasingly important. In 2023 alone, the Federal Trade Commission received 5.7 million fraud and identity theft reports.

Take time to update your passwords, enable two-factor authentication on financial accounts, and review your credit card statements for unauthorized transactions. Consider subscribing to a credit monitoring service for added peace of mind.

Plan for big purchases early

If you anticipate a significant expense this year, like a home renovation or a new car, start planning now. Here’s how to get ahead:

• Set a clear savings goal
• Review your budget
• Consider financing options
• Look for seasonal sales or discounts
• Research tax incentives and rebates

Starting the year with a clear financial plan is one of the best ways to ensure long-term success. By reviewing your budget, setting achievable goals, and planning for big purchases early, you'll be on track to make informed financial decisions. Remember, small changes today can lead to big rewards tomorrow.