In keeping with the fact that January is a popular time for articles on personal finance / budgeting basics, here are 5 steps to better finances in 2011.

1. Start tracking every expense. It doesn’t matter whether you use a spiral notebook, a computer program, smartphone app, or an online budget tool. Every expense should be accounted for. If you spent $5 and don’t remember where or how, then list it as “$5 – unknown.” If you want to write down coffee money per week rather than every day’s coffee purchase, that’s fine. But you need to understand in some detail where the household money is going.

Cost: You can do it with a $1 notebook and a calculator. Or you can use a spreadsheet program that may already be in your computer. Or you can purchase a financial software program.

2. Spend it forward. A lot of money-saving tactics that work for median income and working class families have the annoying requirement of time, money or both up front to see results later.  Pick at least one of those tricks this month, and do it anyway. You will be glad you did that later in the year.

Cost: You might have to front an extra $20 for groceries on a particular week because you noticed that prices were low on products you use frequently. But then you don’t have that expense with higher prices in following weeks. You saved money in the long run.

3. Organize your critical financial papers. You should be able to locate the following documents as appropriate for every family member: birth certificate, marriage license, divorce or custody papers, life insurance certificates, Social Security numbers, military discharge papers, financial power of attorney, health care directive, passport, will, recent tax papers, copies of health insurance cards. Get a folder or binder to hold those documents, and put those packets where you can find them in a hurry. 

Cost: A two-pocket or three-prong folder for each family members’ documents will cost $1 or less each. They might even be free if you find leftovers among the kids’ school supplies.

4. Read at least one personal finance or frugal living book this winter. Even if you find nothing practical or useful in the contents, the topic will encourage you to think about money and what you are doing with it.

Cost: Free if you select a title that’s in the collection of your public library or borrow a book recommended by a friend.

5. Add some personal finance and frugal living experts to your email, Facebook or Twitter feeds. Look for people whose financial experiences, perspectives or lifestyles click with yours. There are hundreds, of not thousands, of personalities and voices to choose from.

Cost: Free if you already have an Internet connection. Start your collection with the financial blog lists posted at Wisebread or at MoneyCrashers. (Monroe on a Budget is on both of those mega lists).

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