First Person: I'm Starting the New Year With a Financial Head Start

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Each January, I sit down with my "money" and have a serious discussion about how I want it to behave for the rest of the year. In previous years, I found that having this heart-to-heart talk with my money has helped me throughout the year stay on budget and meet my financial goals. As part of this little money chat, I prepare a checklist of financial chores that I strive to complete during January to make sure that I stay on track financially.

My financial checklist

Commit to tracking my spending - I chose to do this with a mobile app for my phone; however, you can use accounting software (QuickBooks, Quicken, etc.), websites (LearnVest or Mint) or even old-fashioned pen and paper. I find this helps me break down my spending into categories so I can identify areas where I can cutback.

Set long-term and short-term financial goals - Without a goal, I am not as motivated to save money or work hard to keep my finances on track. Therefore, each January I set my short-term and long-term financial goals. It is better to use specific goals. If you are too vague ("being debt free in 10 years"), it is more difficult to map out concrete steps to achieving that goal. For example, my long-term goal for this year is to purchase another vehicle by the end of the year. Therefore, I set short-term goals for each month to save a specific amount for a down payment. Each financial goal has detailed steps for achieving my goal.

Review insurance policies - I review each of my insurance policies (life, auto, home, health, etc.) to make sure that the coverage is adequate. Furthermore, I check to see if the deductibles could be raised to save money or if I can save money by shopping around or bundling with a specific company. It is also important to review beneficiary designations too.

Review and update wills, trust agreements and living wills - No one likes to think about death; however, it is important to make sure that you do not leave a mess for your loved ones to untangle. Therefore, I always review my will, living will and any other financial documents that my family may need should I not see another New Year.

Review my credit report - Your financial health can live or die by your credit score. Credit reporting agencies are not infallible; therefore, I review my credit report each January. It is also important to review your credit report for any signs of identity theft. Everyone is entitled to a free credit report from each of the three main agencies every 12 months. The website for requesting your free credit report is AnnualCreditReport.com.

Review savings - It is extremely important that I pay myself first - - i.e. put money into savings. By tracking expenses, I can find ways to save money to boost my retirement savings, which is becoming increasingly more important with each year closer to retirement. I also review my emergency fund. With the uncertainty of the economy, it is critical that I maintain an emergency fund (one of my goals this year is to increase it from 4 months to 6 months of living expenses).

Having an open, honest dialogue with my money helps me reach my financial goals each year. Keeping my husband and my daughter away from our financial accounts also helps.

*Note: This was written by a Yahoo! contributor. Do you have a personal finance story that you'd like to share? Sign up with the Yahoo! Contributor Network to start publishing your own finance articles.

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