Have your personal finances been a bit of a challenge this past year? According to In2M Corporation’s financial fitness survey conducted this past fall, you aren’t alone!

• Nearly 90 percent of survey respondents are moderately to very concerned about their ability to meet future financial obligations for major items, such as education and retirement.



• Seventy-three percent of respondents said their financial situation is about the same as (40 percent) or worse than (23 percent) when compared to last year.



• Sixty-six percent stated their approach to financial management is either reactive or simply total avoidance. Only a small 34 percent follow a plan of action.

Here are 9 suggestions that you may want to consider for this next year. Now is the time to get control of your finances, and take that first step down the path to financial fitness. Why not start this next year off on the right financial foot?

1. Spend less than you make.
   Just like you can’t loose weight if you take in more calories than you burn… you can’t save money if you spend more than you bring in. Spending less than you make on a consistent basis is the key to reaching financial fitness and financial stability. You can’t increase your savings, make investments, reduce debt or even make wise spending decisions if you’re consistently overspending your income each month. Forty nine percent of respondents, to In2M’s financial fitness survey, said they rarely, if ever, use a budget to manage household spending. No wonder they have so many challenges with overspending, increasing debt and lack of savings.
   
   
   Put together a spending plan and make it one that works for you and your family!
   
   For a step-by-step process of how to make an effective spending plan, look in the book Money for Life. This book walks you through the process and explain the reason behind each step, in a way that anyone can understand. If you’d rather go the paperless route, Mvelopes® Personal will help you create an online spending plan.
   
   
2. Save more… at least 10% of your income.
   Ever hear of the theory of paying yourself first? That’s basically what this is. If you make it a habit to pull out 10% for savings and investments for retirement, before you pay any other bills, you are actively working towards a better financial future for yourself. This 10% can include your 401k account if you have one, but be sure you are maximizing that option! It’s also wise to put an additional amount into savings after your 401k investment is made. Put this money into a money market account, money market fund or CD if possible, so that you get a higher interest rate. According to In2M’s financial fitness survey conducted this past fall, 48 percent of respondents saved nothing in the past 6 months and 31 percent saved less than 10 percent of their income. Don’t be one of the statistics, take action today and start saving!
   
   
3. Calculate your net worth.
   Do a reality check to ensure you are on the right track. Your net worth should be increasing each year, even if it is just by a small amount. The exercise of calculating your net worth can be very valuable as well… people often discover accounts, investments, etc that they have forgotten about, or need to update.
   
   If your net worth has decreased from the year before, take an honest candid look at where you can make adjustments to improve these numbers. Consider accelerated debt reduction. Consider increased savings. Even consider canceling every credit card you have if it means that you stop overspending and start saving. Be proactive in your efforts to get financially fit!
   
   
4. Start an emergency fund.
   If you don’t already have an emergency fund, start one today! Your emergency fund should have a minimum of 3 months worth of expenses in it. This is your emergency money for a job loss, emergency repair, medical expense, etc. Keep these funds in a money market account or other high interest, easily accessible account. If ever you have the misfortune of an unexpected job loss, unexpected car repair, unexpected appliance problem… you will be far more prepared to weather the storm if you know you have a little breathing room on your finances, thanks to your emergency fund! That peace of mind makes all the difference.
   
   
5. Reduce your debt.
   Use the debt roll down principle to quickly reduce your debt. Make a list of all your debts and prioritize them in order of interest (highest to lowest) or in order of the number of payments till payoff (fewest payments at the top). Once your first debt is paid off, roll that payment amount into the next debt on your list. Follow the same procedure when the second debt is paid off. You will not only reduce the number of years you will have payments, but you will also save thousands in interest if you follow this principle until you are completely debt free.
   
   
6. Use credit cards for the benefits, not the penalties.
   If you use a credit card, only do so when you know that you already have the funds set aside to pay the balance completely when the bill arrives. Do not carry a balance on your card! It wastes money and ends up costing you a fortune in interest and finance charges. Thirty Eight percent of respondents to In2m’s Financial Fitness Survey stated that they never pay off their balance, and 33% only do so part of the time. Are those airline miles really worth it? Not if you aren’t paying the card off every month!
   
   
7. Make sure you have adequate insurance.
   We’re talking home, life, disability, health, property and even auto. Not too many other things will matter if you have no fire insurance and your house burns down. Thirty Five percent of respondents to In2M’s Financial Fitness Survey stated that they either knew they had too little insurance or that they weren’t sure what their coverage was. Make sure that you, and your family, are covered adequately!
   
   
8. Create or update your estate plan and/or your will.
   Whether you are single, married, divorced, kids or no kids… you need to have the proper documents to make your wishes known.
• Update your beneficiary info on your retirement accounts, insurance, etc.
• Specify money that you want to give to charity through a trust or gift exclusion.
• When preparing a will reference an addendum in the will where you list who will get your various assets and personal property.
• Make sure all language is clear and as specific as possible so that your wishes can be carried out.
  
  
9. Manage your portfolio.
   If you have any 401k accounts from former employers, be sure you roll them over into an account that you control. Consolidation can also make your retirement accounts easier to manage, however, in doing so make sure you don’t jeopardize the diversification. Tools like Mportfolio®, from the makers of Mvelopes Personal, can help you manage all your investment accounts from one spot, quickly and easily.

Take advantage of the New Year and get on the path to financial fitness!

By Steven B. Smith, author of Money for Life – Budgeting Success and Financial Fitness in Just 12 Weeks and the Money for Life Success Planner – A 12-Week Companion to Achieve Financial Fitness (Available at www.mvelopes.com).