This week, we turn our attention to the second common New Year’s resolution: saving more money.

You may wonder why we did organization first.  Actually, lack of organization can be expensive.  If you can’t find your bills or you don’t have a schedule to deal with them, you could find yourself paying late fees which are wasted money.  If you can’t find the things you need for a project, you end up buying duplicates.  Not planning your grocery shopping and meal preparation could lead to a fridge full of spoiled food.  Being well-organized can help you save money as well as time.  Plus, time is your most valuable resource.  You can never make more of it.

The first step in saving money is knowing your starting point.  A good place to start is by determining your net worth and itemizing your budget.  You can find a form for outlining your net worth here:  http://www.washingtonpost.com/wp-srv/business/pdf/networth.pdf. A form for your budget is here:  http://media.washingtonpost.com/wp-srv/business/pdf/BudgetWorksheetPost.pdf.  You may have to add some categories for specific expenses you have.

Once you’ve filled out these foms, you need to understand what the forms mean.  Your net worth gives you a sense of your financial health.  You want your net worth to be a positive number.  If that number is negative, you may need professional help to reduce expenses and debt.  Please attend to it now.  It’s an emergency.  If the number is positive, you may want to divide it into assets that can easily become cash (stocks and bonds) and those that cannot (IRAs and real estate).

Your budget form tells you how you spend your money.  In order to save more money, you need to either increase your income or decrease your expenses.  Those are the only two choices.  In the days ahead,we’ll look at ways to do both.