While 40% to 50% of us make New Year’s resolutions on January 1—a
ritual that has existed since ancient times—approximately 60% to
80% of us have already broken them by the end of February,
according to researchers.
It’s still not too late, however, to reset the trajectory on your
family’s finances, experts note.
1. Build a Budget
If you haven’t already done so, create a realistic budget.
Approximately 85% of your income should be set aside for
necessities like housing, food, health care and clothing,
according to the professionals at VISA USA.
This leaves 15% for entertainment—and something many consumers
completely neglect: savings.
2. Distinguish “Needs” from “Wants”
Make sure you have a clear understanding of what you need in life
versus what you want in life.
You need to pay for the antibiotics when the doctor diagnoses a
respiratory infection. You don’t need to buy the latest movie
released on DVD to aid in your recovery.
You need to pay the rent or mortgage. You don’t need to buy the
lovely accent pillows that beckon to you from the interior design
boutique.
Always separate the needs from the wants—particularly if money is
tight.
3. Monitor Your Spending
To see what you really spend each month, keep a running log of
all purchases—no matter how small—for a full month. This will
give you a visual display of where your money goes after you
deposit your paycheck.
You may find that the $3 cup of coffee that starts each day adds
up to $90 a month—a pocketbook pincher that may prompt you to buy
a pound of coffee beans at the local market and grind them
yourself. That $90 blossoms into $1,080 in savings at the end of
a year.
4. Create an Emergency Fund
Life is full of surprises—both positive and negative. If you
happen to lose your job or suffer an illness that temporarily
sidelines you, you will need cash reserves to support you during
the rough months.
“In most cases, consumers who find themselves dealing with a
financial hardship are unprepared and have not saved for
unexpected situations,” says Diane Giarratano, director of
education for Novadebt, a U.S. financial management service
agency, with multiple locations, that provides credit counseling,
budgeting and financial education.
5. Educate Yourself
When you attended high school or college, you studied history,
mathematics, language and science, but there was probably no
course in basic money management.
If you need help in meeting a financial goal—whether it’s buying
a home or reducing your debt—take advantage of community
resources.
“Consumers should feel free to contact a good credit-counseling
agency to obtain free advice with regard to establishing a budget
or to learn how to handle unexpected hardships,” Giarratano
says.
6. Don’t Become a Victim
Identity theft has become an international epidemic, so be
extremely cautious when giving out your credit card or personal
identifying information. Monitor your credit card bills carefully
for unauthorized charges, and immediately report suspicious
activity to the issuing company.
“Identity theft is often an inside job,” warns Robert
L. Siciliano, a personal security expert with Boston,
Massachusetts-based SafetyMinute Seminars and author of
“The Safety Minute.”
“Lower-level help desk workers and frontline call center
employees often have access to all our personal information in
their databases,” he says. “What are you doing to protect
yourself? If you’re not paying attention, you could be a victim,
too.”
And when a disaster strikes, such as the recent killer tsunamis
in South Asia and East Africa, be wary of scammers from fake
charities before reaching for your checkbook. Unfortunately,
there will always be unscrupulous individuals who seize such
opportunities to profit from others’ misfortune.
“Avoid using your credit card to make contributions,” advises
James Walsh, author of “You Can’t Cheat An Honest Man: How Ponzi
Schemes and Pyramid Frauds Work...and Why They’re More Common
Than Ever.”
“Even though this can be a convenient way to proceed, many crooks
are looking for credit card numbers,” Walsh says. “They will
press strongly for ‘immediate support.’ Don’t rush.”
Instead, initiate the call yourself, and select a reputable
charity.
“Go with recognized names,” Walsh says. “No organization is
perfect; even the best-meaning groups occasionally misallocate
money or fall victim to abusive employees. But larger charitable
groups—like the Red Cross, the United Way and Catholic
Charities—have the mechanisms in place to audit their people
and performance.”
Charitable contributions are tax-deductible, so keep good records
of all donations—including small cash gifts.
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