Many people will make resolutions to better manage their personal finances in 2013, and whether that means saving more, or setting up a personal budget, the suggestions can getoverwhelming.
GreenPath Debt Solutions, a nonprofit financial organization, providing consumers with financial education in housing, debt management and bankruptcy concerns, has organized five easy personal finance goals for consumers in 2013.
1. Set up a money management system that works for you. One fundamental fact that gets lost in all the discussion of personal finances is this: To become financially secure, you must spend less than you make. Different systems work well for different folks, buthere are a few ideas:
• Write down your income and all of your monthly expenses. Look for opportunities to trim expenses wherever you can.
• Identify the areas where you might overspend, and then decide to use cash for these transactions. Then, limit the amount of cash you put in your wallet each week to the amount you've decided to spend. Seeing the amount of money available as a fixed, finite thing can help you control your spending.
• Set up automated budget alerts using your financial institution's website or a service like Mint.com.
2. Review your credit report. You don't necessarily need to pay for a credit monitoring service to be able to understand your credit report. You can obtain each credit bureau report one time per year for free by visiting www.annualcreditreport.com. If you're having trouble understanding how to improve your credit, a free credit report review with a non-profit agency, such as GreenPath, can help.
3. Begin to save. Once you've got a workable budget, automate the process of saving. Setting up direct-deposit into savings makes it much more likely that you'll save. Plus, paying yourself first helps the money to be "out of sight and out of mind," so that you'll be able to stick more closely to the spending plan you've set for yourself.
"If you are tempted to raid the savings account regularly, consider setting up the account so that it requires two signatures to do a withdrawal," said Bill Druliner, GreenPath counselor. "Then you and a trusted friend would both need to agree that it was appropriate to take funds from the savings."
It's important to reach a point where you have a balance between short-term savings and long-term (retirement) savings. It should be a priority to try to adjust your budget, so that you can take advantage of any employer-sponsored retirement plan that is offered at your job – especially if the employer offers a contribution match.
4. Get serious about reducing debt. One of the first steps in decreasing your debt load is to stop adding to it in the first place. Begin to get out of the habit of using credit cards for purchases.
If you have consumer debts, look for ways to try to reduce your overall interest costs. This could include balance transfers, consolidation loans, and/or a Debt Management Plan through a non-profit credit counseling organization.
"Strive to reach a point where you never carry a balance on your credit card," said Dorothy Barrick, GreenPath counselor. "The money that you have been spending on interest is money that could be going towards building savings and financial security."
5. Learn something new about personal finances. Many community organizations, non-profits, and community banks and credit unions have free courses available to learn about money management
A good local resource is Consumer Credit Counseling Service of McHenry County, which has been helping people manage their money more effectively since 1982. For more information, call 815-338-5757.