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While 40% to 50% of us make New Year's
resolutions on January 1 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 Safety Minute
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 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 nand 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,îWalsh 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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