How To Be Money-Smart In 2009

With the economic turmoil swirling around us, it’s natural to worry about your personal finances. Many people are already on a limited or fixed income. But by taking steps to cut spending, and by following a sound budget and savings plan, you’ll be well-prepared to stand on solid financial ground in 2009.

The first step to getting your finances in order is to create a budget; this will help you figure out how much you can reasonably spend, and how much you can save. (Of course, you’ll especially want to track and control your expenses during the holidays.) Here are the budgeting basics:

A penny saved is a penny earned

Financial experts recommend that you have enough savings to cover expenses for at least three months. But don’t stop there if you can do more!

• Allocate a set amount of money to contribute to a retirement plan each month (10% of your income is recommended). If your employer doesn’t offer a plan, consider Individual Retirement Accounts, which are offered by a variety of financial institutions including banks and credit unions.
• Have your employer direct-deposit a designated amount from each paycheck into a savings account. This will give you a nice buffer for those unexpected expenses like home and auto repairs.
• Create a special savings account for birthday and holiday gifts.

Easy ways to cut corners

By making some simple changes, you can easily cut corners just about every day. Here are some pointers for keeping more of your hard-earned money:

• Shop smart. Check grocery ads each week to find the best deals on food. Then, prepare a list and stick to it when you’re in the store. Whatever you do, don’t go to the store hungry! Also, clip coupons, buy store brand products, and avoid pre-packaged foods, which are often more expensive, not to mention unhealthy. Buy toiletries and cleaning supplies at discount stores, as they tend to cost more at grocery stores.

• Cut out the extras. Take a look at your monthly bills. Paying for cable TV that you seldom watch? Eating out too often? Not reading the magazines you’re paying for? Cut out the things that you really don’t need and you’ll find yourself with extra money each month. These can include cups of joe at the coffee shop or movie rentals. Brew coffee at home and check out movies for free at your local library.

• Fight impulse spending. It’s easy to buy on a whim. Something catches your eye and suddenly you’re spending your grocery money. If you think it’s something you absolutely can’t live without, put it on an “impulse list” and wait 30 days. If you still want it after 30 days, shop around until you find the best deal. Ideally, wait until it’s on sale. You don’t have to be a financial wizard to manage your money wisely. By sticking to your budget and making some simple changes in your lifestyle, you can rest a little easier about your financial future.

Source: VitaJournal December 2008 pg 10.