With all of life’s distractions, it’s easy to be careless with money. Yet there’s a price to pay for ignoring your finances. The start of the new year is an ideal time to renew your commitment to fiscal responsibility. Here are some simple ways to be more mindful of your money and improve your financial habits.
· Monitor your accounts. It’s a modern miracle that we can access our bank and credit card accounts online 24/7. Checking your transactions and balances daily on your smart phone, tablet or desktop computer allows you to keep tabs on spending, especially if you don’t regularly balance a checkbook. It’s also a good way to spot fraud or mistakes. The sooner you see something wrong, the faster you can resolve the problem (or in the case of identity theft, limit the damage). On the other hand, if you allow too much time to pass before identifying a banking error, you may be out of luck. According to the Federal Trade Commission, you have 60 days from the date a problem or error was documented in a statement (online or in print) to contact your financial institution.*
· Pay attention to your daily financial transactions. Despite the aid of automation, human beings still make mistakes. It’s not unusual for a sale item to be rung up at full price, or for a store clerk to provide incorrect change. The distraction of cell phones and our “hurry-up” culture doesn’t help matters. With the number of cash, check, debit and credit card transactions you make every year, even losses of a dollar here or five dollars there can add up to a significant amount. You can avoid common mistakes during routine financial transactions by being more aware as your items are scanned at the checkout register. Do the mental math as the clerk hands you your change. For good measure, check the receipt for accuracy and, if there’s a problem, quickly and kindly point out the error so it can be corrected.
· Save your receipts. Your receipt is a record of your transaction that can help you monitor your accounts. If there’s a dispute – for example, if an ATM gives you the wrong amount – your receipt may be your only recourse for resolving the discrepancy. Most merchants require a receipt in order to return or exchange an item you purchased. Finally, if you itemize business-related or medical expenses, you’ll need receipts to tally your deductibles and substantiate your tax return in the event of an audit. If you don’t like handling the paper, request digital receipts, which are becoming more common.
· Respect your cash. If you find yourself wondering where your money goes every month, take note of how you spend your hard-earned dollars. Consider shifting to cash for a week instead of using a debit or credit card. This will help you really see what you’re spending. You may be surprised at how doing this can help you get a better grasp on how much you spend.
These common sense reminders are small but important steps to help you put your financial house in order as you start the new calendar year. Take your resolve one step further and meet with a financial advisor for a financial tune up. Together you can identify specific goals for spending, saving and investing in the new year.
Paul Fragala, CFP®, CIMA®, is a Private Wealth Advisor with Ameriprise Financial Services, Inc. in Andover, MA. He specializes in fee-based financial planning and asset management strategies and has been in practice for 20 years. To contact him: www.paulfragala.com, 76 Main St., Andover, MA, (978)-474-9900.
Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC.
Ameriprise Financial does not provide tax or legal advice. Consult your tax advisor or attorney.
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