

A roadmap to achieving financial goals

February 17, 2010
Times Leader
A Personal Budget
Your Map to Achieving Your Financial Goals
When it comes to New Year’s resolutions, national surveys show that reducing debt and saving money rank just behind losing weight as the most popular resolutions to make. January was Financial Wellness Month and now is as good a time as any to make a new start toward realizing your financial goals.
The first step, whether it is to increase your savings or reduce your debt, is to have a clear view of where you are now, financially. That means creating a personal budget - an estimate of your income and expenses over a period of time. With a personal budget, you can get a better idea of where you spend your money, where you owe money and how much. When you know that, you can decide what steps to take to reach your goals.
To create a personal budget, first determine how much income you are making each month, including wages after taxes, pensions or other income you receive on a monthly basis. Then, figure ouat how much money you spend, and to whom you are paying that money. You will need to track your expenses for at least a month and the longer the better. You will have fixed expenses that are the same each month, such as your rent or mortgage, car payments, insurance and property taxes, and expenses that vary each month, such as gasoline, food and utilities.
To track your expenses, write down every dollar you spend. Don’t forget to track all purchases made with cash, including small items. These will be more difficult to track if you don’t get a receipt, but try to write down as much as you can. If you are not good at tracking your cash expenses, at least keep track of how much cash you put in your wallet, so you know how much you are spending. Then, add that amount to your budget tracking worksheet.
After tracking your expenses for several months, you will be able to set up an estimated budget, based on the information you have collected. Compare your monthly income to how much money you are spending, and where you are spending it, each month. You now have a snapshot of your finances and can make the changes necessary to manage your money to reach your financial goals.
If you want to reduce your debt, you are not alone. According to a 2007 report by Demos, a public policy research group, the average credit card debt among people age 65 and older rose 194 percent, from $1,669 in 1989 to $4,906 in 2004. Those between ages 55 and 64 saw a 121 percent increase in debt to $5,916.
How can older consumers get their finances back on track? Debt counselors suggest:
∫ Prioritize your debts, protecting your home first.
∫ Call your creditors now and explore bill paying options before you get into serious trouble.
∫ Do not refinance credit card debt with a home equity loan.
∫ Cut up your credit cards and pay by check or cash.
∫ Pay off credit cards with the highest interest rates first. Each time you pay off a card, add that payment to the card with the next highest rate until it is paid off.
∫ Work with an accredited nonprofit credit counseling agency to begin a debt repayment plan.
If you want to increase the amount you are saving, experts agree that you need to pay yourself first. Examine your personal budget, determine what changes must be made to save a fixed amount monthly and make doing it a priority and a commitment.
Remember, your personal budget is only as good as the information you use to create it. Be realistic. It may look good on paper, but a budget that you can’t follow or live with is not going to help you reach your financial goals.


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