Here are ten money questions to ask yourself.
1. How do I track my spending? Do you rely on memory to keep track of your spending? If so, consider switching to Mint.com or even making a note in your phone every time you buy something. It's likely you don't have a perfect memory (I don't!) and will forget some purchases. One or two small purchases won't make a difference, but added up over time that can be a lot of money.
2. When was the last time I reviewed the budget? At least once a year you should be reviewing your budget and updating it. Your income and expenses are likely to change throughout the year, and it is important to have an accurate and realistic budget.
3. How did my family handle money? How your parents handled money while you were growing up likely had a big impact on you. From who handled the money, to how much money was available, it shaped how you look at money today. Do you recognize some of your parents' habits in you?
4. When was the last time I checked my credit report? You are allowed, by law, one free credit report per year per bureau. I check my credit report every four months and look for an inconsistencies or wrong information. This is especially important for me as I have had my identity stolen (oh, how much fun that was!). I recommend Annual Credit Report.
5. Do I have a realistic plan for paying off my debt? No matter the type of debt, you need a plan for paying it off. Do you plan on paying the minimum and are your debt payments in line with your budget? Your debt payments should be about 10% of your income, so if you have some extra room to put more toward your debt you should.
6. Have I updated my tax withholding? Many people just fill out their W-4 when they start a job and forget about it. But every time you do your taxes, you should think about updating your W-4. If you are getting a large tax refund every year, increase your withholding and therefore your monthly income. And if every year you get a large tax bill, consider lowering your withholding so you don't have to pay as much every spring. I know we'll be updating our W-4s this spring after we do our taxes.
7. What's my Plan B? Have you thought about what would happen if you lost your job or got injured? What happens to you if your partner dies? It's important to prepare for the worst-case scenario, so you and your loved ones are taken care of. Build an emergency fund, prepare a will, and look into life insurance and other protections.
8. Do I have short- and long-term goals to work toward? It's hard to just save, save, save without a stopping point or purpose. Create some short-term and long-term goals to motivate you and give your money a purpose. This will help you balance present wants versus future needs.
9. Do I regret a lot of purchases? Think about the last five things you bought and if you regret them. If you find yourself regretting most of the purchases you make, you may be buying more on impulse than what you actually need or want. If you are an impulse shopper, think about why you impulse shop (and what you most often buy), and how you can cut back.
10. Do I give back? I strongly believe in giving back to the community, by donating money/goods or time. Build some good karma (and appreciation for what you have) by making a small sacrifice for others.
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