Prepare for taxes. If you dread doing taxes, take away your fear with a handy set of file folders or a single accordion file. Hang on to the receipts you collect during the day (jot a note on the ones that might be deductible), then slip them into the appropriate slots. If you make this a habit, all you’ll need is about 15 minutes to pull the information together to file your taxes next year.

Create an emergency fund. Life is full of surprises and ultimately unplanned expenses. Keeping a personal stash can save you from financial ruin in the event of an unforeseen illness, accident or layoff.

Make a will. If you haven’t already done this, stop putting it off! At the very least, you need a will and a Health Care Power of Attorney, which authorizes a person you name to make health care decisions for you if it becomes necessary. And if you have minor children, you need to name a guardian. It’s a simple process that will pay back with peace of mind. Make an appointment with an attorney who specializes in end-of-life issues.

Scan important documents to CD. Could you put your hands on all your important papers? Even if you know where they are, chances are your insurance policies, birth certificates and tax records are scattered about. Make life easier by taking time to scan all of your documents into your computer, then store them on CDs. Keep a copy for yourself and send one to a trusted friend or relative.

Plain and simple, plans are necessary in order to reach a goal. When a person decides to run for a public office, he or she makes out a plan that includes where to get the necessary financing and how much will be needed for advertising, marketing, and other office expenses. Teachers must have a plan for what they will teach each day, each week, and each month. They are required to plan out when to give tests and to measure their students’ progress throughout the year.

If plans are so important, why do so many of us think we can manage our finances without one? Most people don’t use a spending plan.

Many people hear the word “budget” and respond negatively. They think of a budget as being restrictive, too limiting, and too legalistic. Yet, in truth, a budget can be very freeing; it can bring peace and break the bonds of being a slave to our money.

A budget is simply a plan – a plan for how to spend the money we have. A budget is a great way to make sure we are handling money in the best way.

Without a spending plan, it is impossible to know where your money goes each month and whether you will have available funds for the things you need. The “not knowing” can create feelings of anxiety and fear. Financial problems can cause stress in marriages and other relationships.

When you create a spending plan, you can have the peace of mind in knowing that your bills can be paid, you have funds available for emergencies, and you know what you can spend for the things you need and want.

One line item should be savings. To get ahead you should start paying yourself first. Some suggest 15% of your income, but if you can’t afford that, start with what you can afford and increase it over time. Many people think they can’t afford to pay themselves first. Why work all the time and have nothing to show for it? If you think you don’t have any extra money for this, take a look at what you have been spending your money on and see where expenses can be cut.

Live within or below your means. If you constantly spend more than you make each month, you will continue getting in deeper debt.

One way to get your expenses under control, is to track your expenses. For one week, write down everything you spend money on each day. At the end of the week, you will see where your money is going and can determine if there are ways to cut expenses.

Saving is a discipline and needs to become a habit. Have the discipline to wait until you have the money saved to purchase something you want. Too many people give into the instant gratification of purchasing items that they want that they cannot afford. Live below or within your means. It’s also important to have an emergency fund in the event of unexpected medical expenses and job layoffs, etc.

Once you get in the habit of making a monthly budget and living by it, it will get easier and not feel as restrictive as you may think.

A big step to financial stability is to create an Emergency Fund. Start by saving $1,000 as emergency fund. You could put this money into a checking account, separate from your regular checking account, or in a Money Market account with check-writing privileges without fees. The emergency find is your financial cushion, your rainy day fund. In case life happens while you are on the path to debt freedom, you will have money to deal with the emergency without borrowing again.

It’s important to acknowledge that a lot of debt problems are a result of bad behavior, the bad habit of overspending and borrowing only to spend more. You simply have to change your behavior as it relates to money. First, stop spending money that you don’t have, plain and simple. What happened to saving money to purchase something you want? It’s what we did as children, saved up our weekly allowance until we had enough to buy that special toy or outfit. It’s time to get back to basics and spend only what we have and can afford.

Next you have to make a list of all your debts from smallest to largest balance. Start with the smallest debt and work your way down to the largest one. Pay minimum on every debt on your list except the one at the top; apply any extra money to that debt in the #1 spot until it’s paid in full. You may have varying interest rates, but don’t worry about the math.  Paying off your debts is 10% math and 90% behavior and emotion. What will drive you is the emotional rush you’ll get as you change your behavior, as you begin to knock out one debt after the other. The math will take care of itself if you stay intensely focused and follow this simple debt snowball plan.

It’s important to note, if you owe taxes to the IRS, list that debt first. Tax collectors have a lot of power over your financial life. They can do to you whatever they want whenever they want. The tax people can confiscate your car, house, other assets and auction them off in government auctions. Or they can garnish your wages, and there’s little or nothing you can to stop them. These people can inflict more harm on you and your household than the collection department of any bank or credit card company. You definitely want to pay off your tax debt first and fast.

As you pay your smaller debts, which may not take you long to knock out, you will pick up momentum for the next larger debt. This will motivate you to take on your debts. Every time you pay off one debt, roll over all the money you were paying on that debt to the next debt. As you move to the next debt on the list you will pick up additional cash to speed up the pay off process. That’s what gets your adrenalin flowing, fueling your intensity.

Make sure to reward yourself as you make progress towards debt freedom. When you pay off a debt, celebrate the victory, you are closer to the financially euphoric debt-free life that awaits you!

Starting an emergency fund is a great way to spend your tax refund check. Just pretend you don’t have it. Why do you need an emergency fund? Because you never know what life is going to throw at you. Emergency funds can make things like car repairs, tickets home to see a sick relative, or exploding hot water heaters seem like small problems instead of huge catastrophes.

Many families create budgets. But, you can’t simply have a budget in place, you also need to learn how to maintain that budget. When used effectively, your budget becomes one of the best financial tools you have at your disposal.

The easy part is creating the budget – the hard part is sticking to it and learning to live within your means, especially if you’re used to relying on credit to get by.

Here are some ways you can make your budget work for you:

Put it on paper

When you set up your budget, don’t try to keep it all in your mind. It will never work! You need to write it all down on paper (or in a spreadsheet or financial software) in order to keep better track of what’s happening with your money. Assign your income to the various categories of expenses and bills you have to pay and take control over your money rather than letting it control you.

Use self control

Once you have your budget created (make it realistic so you at least have a chance to stick to it!) remove yourself from activities that might cause you to stray from the plan. If walking by the store makes you want to go in and buy something you don’t really need, take a different route!

The wise person who sticks to their budget avoids making these purchases or puts them off even though they might miss out on a good deal. In fact, make it a rule that all purchases must go through a 24 to 48 hour incubation period before you actually buy them. By the time you wait it out, you might realize you don’t really need or want that item as much as you thought you did. When you do go shopping, don’t go without a list and the will power to buy only what is on that list.

Focus on the long term benefits

If you stick to a budget religiously and pay off your debt, think about how much better your financial situation will be in three months… six months… three years from now. That should give you motivation and help you stick to your financial plan. Think about the great feeling you’ll have when you have an emergency fund ready to pay for emergencies and unexpected expenses that pop up from time-to-time that previously would have caused you to get a loan or pull out a credit card. Use that good feeling as a motivator to stay with your budget. Keep telling yourself that you are in this for the long haul and that nothing is going to take you out of your plan or off of your budget.

Savings Accounts

It’s essential to build up a cash stash for emergencies, especially in a shaky job market. Interest rates on savings accounts will likely decline with the Fed’s rate, as a result,  you can profit by putting your money in a certificate of deposit (CD) account — the rates are more competitive and locked in for a fixed period. (A CD can yield around 2.5 percent more than a typical savings account. Make the switch soon though; if interest rates continue to drop, so will CD yields. Another option is to open a savings account at an Internet bank. “Compared with traditional institutions, online banks pay better rates on savings accounts because they’re spared the cost of maintaining branch offices. Or transfer your savings account at a mainstream bank to its online division, where rates are slightly higher. But don’t move your money unless you’re upping your rate by at least a point or it’s hardly worth the trouble. And remember, before you make a move, be sure to consider starting fees, annual fees, and other expenses.

Student Loans

Interest rates on federal student loans are adjusted every July 1. Considering the current interest rate trend, that’s good news for college graduates still struggling to pay off their debt. If you have multiple federal loans at varying rates, you can shave your monthly payments by consolidating. Contact your lender or the U.S. Department of Education at loanconsolidation.ed.gov. If you’re repaying a private loan, stop mailing checks and send them electronically. Many lenders knock half a percentage point off your rate for online payments because there’s no paperwork and less processing.

To start your own plan you’ll need to first take control of your money. A simple statement that could prove to be much more complex than you first anticipate. Following a proven, step by step, process makes it so much easier to implement your finance plans. A good personal finance plan starts with a realistic budget. Realistic means one that balances. Your income must be sufficient to meet your expenses. If not, you have two options, increase income or reduce expenses. You’ll most likely find it more practical to get your spending under control first. Tracking your money is a crucial step in planning your budget and finances.

Your plans should include goals to manage debt and increase savings. Get spending and debt under control first. Then, set financial goals for future plans. If you have children, you may need to plan for college. And, it’s never to early to make plans for your retirement. Work these goals into your budget as if they were monthly expenses. Commit to pay yourself every month in planning for your future goals. Build an emergency savings so you will have something to fall back on when unexpected events arise. Planning for these events is the only way to keep your personal finance plan from derailing. It will keep you on track and headed in the right direction!

Personal finance planning is all about you. It’s about you and your family’s individual needs, dreams, and security. While you can simplify the process by using a standardized financial planner, budgeting software to walk you through the steps, or prepared worksheets, the data is all about you. Only you can plan for your future.

If you have no savings or investments you may have to rely on credit cards and could rack up significant credit card debt. Then when you find a new job, your expenses may have increased because of the additional credit card payments. 

And the job you eventually find may not pay as much as the one you lost. So you are now forced to live on less while your expenses have either continued at the same level or even gone up.

Studies show that the average worker will have six career changes in his or her lifetime. Not just job changes, but career changes.

So how can you prepare for your own financial “downtime”?

An emergency fund. 

An emergency fund is really just savings. But it is not savings for a particular item or even an investment for your future or your retirement. It is your “rainy-day” fund. But unlike insurance where once you pay your premium, the money is out of your hands, your emergency fund is yours to keep.

So how much do you need? How can you build your emergency fund? And where should you keep the money?

The easiest way to figure out how large your emergency fund should be is to take your current income and multiply it by the number of months you could be out of work. If you make $3,000 each month and you want to be prepared for a 6 month “vacation”, you will need $18,000.

But obviously saving $18,000 will take some time. How quickly you want to build your emergency fund depends on how concerned you may be about your current and future employment prospects.

Saving $100 each month will take you 180 months or 15 years. Saving more each month means you will be protected sooner. Also consider that during the next 15 years your income may increase and your expenses usually rise to match your income.

Also consider inflation. (If you own your home, your house payment may not rise. If you are renting, your rent probably will.) The cost of food, utilities and taxes also rise over the years. At a 3% inflation rate after 15 years your $18,000 will only buy $11,400 worth of goods.

A good rule of thumb for saving is to try to save enough each year to supply you with one month’s income. This means you are saving 1/12 or 8.3% of your monthly income.

This will allow you to build your emergency fund by one month every year. After only six years you will have a six-month supply of emergency cash. Then you can continue to extend your “coverage-period” or you can divert the monthly payment into other savings or investments.

Most people find that “billing” themselves for savings and investments is a good way to put your savings on auto-pilot. If an amount is taken automatically from your bank account each month, it is easier to handle than if you wait until the end of the month and try to save from what you have left over. (How often do you have anything left over?)

So where is the best place to keep your emergency fund? Probably not a place where you can have easy access to it – too tempting. Definitely not as cash in the cookie jar – too unsafe (and no interest). And probably not in 5 year CDs – too restrictive. You may want to avoid CDs altogether so that you are not charged an early withdrawal penalty when you can least afford it.

Savings accounts are OK, but usually pay very little interest. If a savings account is your choice, open one at a bank that you don’t regularly use. Also don’t get a checking account to avoid the temptation to spend “just a little” bit here and there.

Or look for a money market account that pays a reasonable interest rate. You may want to consider a money market account that only invests in tax-free securities. This way you won’t have to worry about paying taxes on your interest.

Then set up an auto-withdrawal from your regular checking account or direct deposit amount from your pay check right into this new account. Adjust your budget to accommodate having less money each month and forget about it.

You can also give your emergency fund a boost now and then by putting “windfall” money into to it. You know “free-money”; birthday gifts, inheritances, insurance settlements, escrow overages, rebates, tax refunds, etc.

Your emergency fund becomes your own financial insurance policy. And if you never use it you will have that much more money to play with when you retire. Or even retire early with the extra money you have saved.