Resolve to Manage Your Money Better in 2010: Ten Ways to Get Started from the Illinois CPA Society

When you’re making your New Year’s resolutions consider the findings of a recent national survey done by the Financial Industry Regulatory (FINRA) Investor Education Foundation with input from the AICPA (American Institute of Certified Public Accountants).

Nearly half of the survey respondents reported facing difficulties in covering monthly expenses and paying bills, the majority don’t have “rainy day” funds set aside for financial emergencies and only 41 percent of parents have set aside money for their children’s college education.

If you can relate to any of those situations, chances are you need to do a better job managing your money. With the economy still uncertain, it’s a wise move for anyone to be a little more financially savvy.

The Illinois CPA Society recommends your number one resolution for 2010 should be to improve your money management skills.

They suggest these ten ways to help you keep that resolution:

1. Determine What You’re Worth. The first step to getting your finances in order is finding out exactly what you’re worth to help you make the right decisions. List what you own – money in bank accounts and retirement plans, the value of stocks, bonds, investments and life insurance, the equity on your home and other property such as cars or objects of value, and then determine what you owe – outstanding mortgage balance, auto and student loans, and credit card debts. The difference, positive or negative, is your net worth.
2. Let a Budget be Your Guide. Smart people make a budget at the start of each year. Show income from paychecks, retirement accounts and investments. Be honest and realistic about your food, housing and other expenses. Use Quicken or other software to input your budget and monitor it as the year goes on. As your situation changes (new job or between jobs), adjust your budget. It’s a great reality check for managing your money and keeping your financial house in order.
3. Set Goals. Working towards something you really want – a home, a car or simply paying off all your credit card bills or student loans – can provide motivation to put more time and energy into money management.
4. Keep records in order. Being a good record keeper helps to make tasks like doing your income taxes or completing a loan form easier, and saves you time and money in an emergency. Know where to easily find all important documents including birth certificates, property deeds, insurance policies and wills. Let a trusted family member or friend know their location.
5. Get smart and ask questions. Compare terms on credit cards, check what your bank is charging in ATM and service fees, and watch for shipping and handling fees on purchases. If you don’t understand a term on a bill, lease, bank statement, loan form or sales agreement – ask questions. Most importantly, ask for help when you need it.
6. Control your spending. Review bills and bank and credit card statements and save receipts. Use them to understand your spending habits. Find ways to cut back on some expenses – cable TV, phone services, entertainment, vacations, gifts and eating out – so you have more money to cover necessities and add to your savings. Be a savvier shopper; you can spend less if you use coupons, watch for sales and look for the best price, especially on big ticket items and even on non-tangibles like insurance.
7. Know the score when it comes to your credit. Check your credit reports for FREE annually. Go to annualcreditreport.com or quizzle.com and monitor what the report shows. Make corrections as needed. And don’t forget to always follow the basic rules for handling credit well – pay your balance in full whenever possible, use your cards with caution, carefully read all information sent to you by your credit card company and always check credit card statements for accuracy.
8. Save. It’s not easy to find money to put aside, but save something even if it means cutting back on some expenses. Put a small amount away directly from your paycheck into a savings account each month to serve as your “rainy day” or emergency fund. Increase that amount whenever possible.
9. Plan for Retirement. Understand all the retirement options available to you – 401(k) or other plans available through your employer or action you can take on your own like contributing to an IRA. Make sure to at least contribute the maximum amount that an employer will match; for example, if there is a match for up to 3% of pay deferred, defer at least that amount. Don’t miss any opportunity to save for your retirement; start saving as soon as you can and as much as you can.
10. Change your mind set about money. Don’t take your money for granted. Since transactions are electronic, you don’t get a check in your hand anymore or even realize how much you’ve put on that credit card. Money is real; it doesn’t take care of itself and requires your full and constant attention.

About the Illinois CPA Society

The Illinois CPA Society, founded in 1903, is the fifth largest state CPA Society in the nation, with more than 24,000 members. It is the premier professional organization that represents CPAs in Illinois.

During its over 100 years of existence, the Society has advanced the highest ethical and financial standards of the profession, and has been a leader in educating the public on financial issues.