As we start the new year, many people make resolutions to get a handle on and improve their finances.  Unfortunately, by now many of those people have given up on those resolutions.  The main reason for abandonment is not having the time available to focus on the task of putting a financial plan together. 

Net Worth

Yes, you have one. This is the sum total of your assets (bank account balances, savings, investments, etc.) minus your debts (loans, mortgage, credit card debt, etc.). Your net worth is the easiest way to get a big-picture perspective on your finances and allows you to see if you are making your progress to your financial goals.

Here is one of many net worth calculators that exist.  Take 5 minutes and calculate it.

Cash Flow

I often talk about the importance of getting a handle on Cash Flow (the income you have coming in and the money you spend on expenses going out).  It is the foundation of getting control of your personal finances. 

Keeping track of all of your expenses can be a tedious process.  Do it for a month to understand where you are.  Keep track of every dollar you spend for a month and all of your income that you earn.  Then figure out what expenses you pay annually, semi-annually, or quarterly, and add it's monthly amount to your tracker.  Even if you use a pen/paper or a spreadsheet to track everything the exercise will be valuable. 
 

A lot of people think that budgets are only for people who have too much debt, are tired of never having money, have trouble paying the bills, or are blindsided by unexpected expenses.  That couldn't be further from the truth.  Everyone should have a handle on what they are spending. Your living expenses are just one part of the cash flow puzzle.  How can you know how much you should be saving for retirement, investing for your child's education, or have in an emergency fund if you do not have a handle on your cash flow?

Liquidity

Liquidity is how accessible your money is.  Cash is the most liquid your money can be, because you can access it immediately.  Your home on the other hand would be on the opposite side of the liquidity spectrum.  Even if you sold it today, it would probably be a couple of months before the sale closed and you had the proceeds available to you.  Never mind the fact that you would need to find somewhere to live.

You never know when an emergency will arise.  You want to have enough money fully liquid but not too much where you have your dollars sitting around not earning anything.  Figure out how much time it would take for you to get your hands on $10,000, $25,000, $100,000, and $250,000. 

Passive Income

I call passive income the holy grail of personal finance because it gives you the ability to achieve financial independence.   If you wanted to you would have the ability to quit your job, yet still pay for all of your expenses.

A valuable exercise is to use the assets in your net worth statement you calculated above and figure out  the amount of income those assets could generate if you stopped working today.  Then set some goals on how much passive income ($100,000 a year, $250,000, $1,000,000, ...)  you would like to have and put a plan on the actions needed to achieve that.  Here is an article I wrote on how to execute on that topic.

Planning for a Catastrophe

One question that is critical to answer is how are your family's expenses paid for if you and/or your spouse die or become disabled.  If you calculate your passive income above and you do not have enough to cover your expenses, or if your assets cannot generate enough income each year until you are slated to stop working it may be wise to look at adding life and disability insurance.

There are different ways to figure out how much life insurance you need.  My favorite is to focus on the income that will be lost if something happens to you.  Here is a calculator that helps you calculate how much life insurance you should purchase.

The title of this article was inspired by a great blog I came across at http://getyourshittogether.org/ On that website you can get free templates on life and death planning topics like creating a Will and Power of Attorney.  The author started the blog in 2009 when her husband died in an accident.  She was shocked by the number of things they had ignored or left disorganized.

Getting a handle on your finances can seem like a daunting task, but if you start off focusing on these 5 areas you'll create a foundation for your finances.  Once you have these in place the next area I would focus on would be with planning for goals like (Ensuring you have enough money to retire, paying for your children's education, buying a vacation home, ...)

FIND UNCLAIMED MONEY

One of the best feelings is reaching into your coat or jeans pocket and finding money you didn't think you had.  It doesn't matter if it's a $1 bill or a $20, it still makes it a good day.   

Your coat pocket is not the only place you can find money you didn't think you had.  Nowadays you can find it online.  Unclaimed money essentially hides in plain sight.  You can find things like abandoned bank and investment accounts, uncashed dividend checks and paychecks, tax refunds and funds due from canceled insurance policies.

An estimated 2.5 million claims totaling $2.5 billion were returned to rightful owners in 2012, according to the National Association of Unclaimed Property Administrators. 

Here are steps to see if you have any that is yours.

1. Go to MissingMoney.com, a site endorsed by the National Association of Unclaimed Property Administrators.  It lets you search in many states at once, free of charge
    
2. Check in all of the states where you have lived.  Search under maiden names, trusts, or any businesses that you may have owned
    
3. If you find some money that is associated to you there will be a claims process to go through.  The documents required to complete the claim will vary.

I looked for myself a couple of months ago and found about $50 that I was owed.  I filled out a form and in a month a check for $50 was mailed to me.

WATERCOOLER

President Obama thinks the tax benefit of a 529 education savings plan is too good.  I'm always touting the benefits of using a 529 plan to save for a child's college.  The tax advantages are significant: there are no income limits to utilizing a 529, and there are options to use it if your child does not go to college.  If you don't believe me on the benefits, maybe you will believe President Obama.  If he had his way he would

According to a Wallet Hub study, smoking costs the average smoker at least $1.1 million and as high as $2 million in some states over a lifetime.  Here is how they factor that cost. It's not just the price you pay for a pack of cigarettes

• The cost of tobacco is based on one pack a day for 51 years plus the amount of money a person would have earned if that money were invested instead.

• Health-care costs were calculated by taking CDC data and dividing that amount by the number of adult smokers in a state.
   
• Income loss per smoker is based on a Federal Reserve Bank of Atlanta report that found smokers earn 8% less than nonsmokers, specifically because of their habit.
   
• Other costs include secondhand-smoke exposure costs and losing out on the 5% to 15% homeowner's insurance credit that nonsmokers usually get.

Do you use '123456' or 'password' as your password for any of your accounts?  Despite the high-profile hacking attacks last year, people are still using passwords that security analysts say should have been in the dustbin years ago. Both '123456' and 'password' have been the top two passwords since security-app provider SplashData began measuring the most frequently used passwords in 2011.

A cool chart showing how each asset class performed over 2014

KEY PLANNING AND INVESTING DEADLINES (WINTER)

Do you know what days the market closes for 2015? Or when different tax forms are due? Or when various health care and Medicare enrollment periods begin and end?

Each year brings with it a host of new dates, deadlines, and observances to track. Below is a list of the first quarter's key financial deadlines that every investor needs to aware of. It lists critical tax and investment deadlines, market closures, and other important dates.

January 1. Medicare Part D becomes effective

January 1. Medicare Advantage Plans Disenrollment period opens

January 1. FASFA 2015-2016 opens

January 1. New Year's Day (markets closed)

January 12. BCS Championship

January 19. MLK Day (markets closed)

January 29. National Day of Service

February 14. Medicare Advantage Plans Disenrollment closes

February 15. Health Care Open Enrollement

February 17. 1099-B, 1099-S, 1099-MISC due

February 17. File new Form W-4

February 1. Super Bowl

February 1. Freedom Day

February 14. Valentines Day

February 16. President's Day (markets closed)

March 17: Corporate and S Corp tax returns due; K-1s due

March Madness

March 8. Daylight Savings Time begins

March 17. St. Patrick's Day