Cut costs without cutting fun

January 2014

Eating better and exercising more may top New Year’s resolutions lists, but getting financially fit is just as important.

Keeping track of expenses and putting money aside for those inevitable rainy days is challenging, but here are a few tips employers and brokers should share with workers to help them get – and remain – financially on track:

Organize financial records

  • Toss financial records you no longer need, including old bills, bank statements and receipts. If you receive and pay bills online, unclutter there too.
  • Create electronic or hard-copy folders, label them for easy identification and store them in one convenient spot.

Set a monthly budget and stick to it

  • Learn where your money really goes by keeping a record of your regular monthly expenses: the house and car payments, utility bills, insurance premiums and installment loans.
  • Write down every purchase (everything from groceries to lattes). At the end of a month, a review of the log will give you a good idea of where to cut back. Odds are you’ll be shocked to discover how quickly those under-$5 purchases added up.

Establish an emergency fund

  • Avoid temptation by paying yourself first. It’s easy to overspend one month while telling yourself you’ll make up the difference the next.
  • Deposit a portion of your paycheck directly into a savings or credit union account, or even into an investment account.

Curb your impulses

  • Put your decision on hold for a week or so. That “need it now” feeling may fade once reason sets in – or a wave of bills arrives.

Put your money to work

  • Put extra money sitting around in a checking or savings account where they can work for you by potentially earning a return on investment.
  • Consider opening or adding to an IRA or increasing your 401(k) contributions.

Protect your future

  • Make sure you have a financial safety net that helps protect your family from expenses that can stem from an unexpected illness or accident.
  • Consider voluntary insurance policies, which help with expenses major medical insurance was never intended to pay. This coverage can help you with daily living expenses if you’re sick or hurt and can’t work.

Schedule “plastic surgery”

  • Don’t let credit charges get out of control. Remember that credit–used properly—can be a useful tool.

Reward yourself

  • Leave room in your budget for fun to make it easier to stick to your financial resolutions.
  • Don’t skip vacations; shorten them or choose less-exclusive destinations.
  • Don’t eat at home every night; choose less-costly restaurants.
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This article is for informational purposes only and is not intended to be a solicitation.
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