Suddenly Frugal Blog

If we’ve learned anything from the current recession, it’s this: Being “financially fit” is as important as being “physically fit.” That’s why today’s blog posting, of 10 tips for staying financially fit for life, comes courtesy of Stephanie Sherman, a certified financial planner and partner with Family Wealth Management Group, LLC, in East Hanover, NJ. Sherman suggests you:

1. Track expenses. Save receipts, record expenditures and track expenses for 2-3 months to see where your money goes. Many online banking programs offer customers the ability to categorize and track expenses online. We download our credit card bills into Quicken and review them monthly, along with our online banking statements to get a sense of where our money is going. By knowing how you spend, this will help you see where you can cut back.
2. Trim the fat. Look for ways to save extra dollars each month. Avoid ATM fees and directory assistance charges on your cell phone, pay bills online (it saves postage and time; and time is money), watch movies at home, eat out less frequently, turn the thermostat up a few degrees in the summer and down a few degrees in the winter, turn off lights and appliances when not in use. Ask yourself whether you need all of those premium cable channels. Here are a few more that have worked for our Suddenly Frugal family: find the best phone plan for your finances, even if it means cutting a landline or combining your cable TV, Internet and phone service. By doing the latter, we saved $50 a month on phone expenses and got premium channels for free forever.
3. Save, save and save some more. Build a cash reserve of three to six months of expenses. It may take time, but it may be your lifeline in the event there is a job loss in the family. Look for a savings account with a higher than average interest rate – typically an internet bank – with insurance by the FDIC. You may also find a higher interest rate at a credit union.
4. Reduce Debt. Evaluate your credit card balances, limits, interest rates and monthly payments. Avoid late payments (paying your bills online, via an automated system, helps to ensure on-time payments and avoid late fees). Pay down cards with the highest interest rates first and aim to reduce the balance of every card to below 40% of its limit. This will boost your FICO score.
5. Consider Ways to Make Extra Income. Think of different ways to make extra money through side jobs or a hobby that has marketable benefits. When money gets tight, I’ll often sell stuff on eBay, or instead of donating clothes to charity in one fell swoop, I’ll try to consign them at a store first.
6. Plan for Retirement. Take inventory of your assets and possible income sources available for retirement, such as IRAs, 401(k)s and 403(b)s, and Social Security.
7. Investigate Annuities. Talk to your financial planner about an annuity with a guaranteed lifetime annual payout.
8. Protect your Assets. Review your life and disability insurance needs, especially if you are the primary breadwinner. Ask your financial advisor if long-term care insurance is right for you.
9. Plan for your Beneficiaries. Create a will, choose a guardian if needed, and select who will manage your estate in the event of your death. Remember, it’s not if you die–it’s for when you die.
10. Meet with a Financial Planner. A qualified professional can help you meet your goals and stay financially fit with or without a gym membership!