If you are looking to get your finances on track in 2016, the best advice we have found is to take a serious look at your personal balance sheet, identify all of your debts, where you spent money in 2014 and what option you have to reduce your expense going into 2016 and start creating a rainy day fund to get ahead with financial planning.

The last two years we have witnessed a huge increase in the DOW and this is great for your 401k and those who are living off of their retirement assets, but for the average worker the correlation to an increase in your wages has not been as fruitful. So what that means for millions is getting ahead in 2016 involves planning ahead and looking at ways to reduce expenses and save additional money. Pre-planning for a potential financial change (job loss, unexpected car repairs, health care emergency) can often help alleviate serious financial hardship or potentially missing payments that could dramatically drop your credit score.

Some quick things to identify along the way:

How much money did you make in 2014, focus on your net income, not your gross income, this figure represents the amount after you pay taxes, insurance, contribute to your 401k, etc.

What are your fixed monthly expenses, items that are often overlooked would include cable bills, home security system payments, auto and fuel expenses.

Identify all of your fixed monthly payments that are financed. (Mortgages, Auto, Student Loans, Credit Cards) and create a spreadsheet with the balances and interest rates.

The Number One Step Towards Achieving Financial Goals In 2016 Is Debt Reduction

Reducing your debts
increases your cash flow, allowing you to adjust for inflation and potentially have more money to save and invest. The key to reducing your debts starts by examining your spending habits, are you constantly running a credit card balance versus having a zero balance (zero interest payment) every month. If you are running a balance and simply making minimal payments, would a balance transfer at zero percent make sense for your financial situation? This greatly depends of the card offer and whether you would simply use a new credit card for new purchases. Spending more money than you make is a recipe for failure!

If your goals are to gain some financial advancement for the New Year, you need to have a plan and stick with this, but just like dieting, financial plans can be tough so it makes sense to set realistic goals with some wiggle room. Some easy things that can be implemented, review your cable and mobile phone bills, these two items can often be reduced by simply threatening to switch providers if you are not stuck in a contract. If you can find an additional $50 to $100 per month you should immediately earmark this extra cash towards your debts that have the highest interest rates.

Next up it’s time to review some of your other monthly bills (mortgage payments) have you refinanced into a lower interest rate, it’s always a good idea to check where you are at versus the market interest rates. Auto insurance premiums are always a good target to look at reducing your expenses, every year is your car depreciating and your monthly insurance premium increasing, take a closer look at your coverages and deductibles and Shop, Shop, Shop at least once per year to find out if you can save money.

Contribute to your 401k fund at work, even if there is no company match this gives you a pain free way to start saving money. This money is tax deferred which will lower your tax premiums while helping to improve your financial balance sheet.

Don Marks is a correspondent writer for TopCreditCards.co, he worked extensively in the finance industry from 2003 through 2009 helping consumers balance their credit/asset portfolios.