Things To Think About

Belt-Tightening That Doesn't Pinch

Keep these ideas as you begin the adventure of paring down your spending.

Follow your own priorities. Focus on cost-cutting techniques that are right for you. Consider:
- Your biggest expenses. Reducing them even a little bit could free up lots of dollars.
- Stuff you won't really miss. Magazines you subscribe to but don't read are a prime target, and so are extra cable channels that you don't watch often.
- Unconscious daily spending. Your morning coffee and paper might only cost $3, but over the course of a month that adds up to $60 - enough to pay the phone or cable bill.

If you can't eliminate an expense, try reducing it.

Make friends with folks who are also cutting down, and trade tips with them.

Talk through the budget with your spouse and kids to have everyone on board. This process will help make decisions easier, especially when a team effort is needed.

How to Track Expenditures

Follow three simple steps:

1. Every time you get money or spend it, document where, what, when, and how much. (Free online tracking tools: Mint, Yodlee, Wesabe or iXpensit app for iPhones.)

2. Write out a list of categories for your spending. You can include whatever categories make sense to you. (For example, some people might have groceries, dining out, work lunches and snacks. Others might just have food.)

3. After a few weeks, add up how much you spent in each category. Take note of any expenses that happen repeatedly, and start to plan for them so you aren't taken by surprise.

How Often Should You Adjust Your Life Insurance Policy?

A good rule of thumb is to recalculate your life insurance needs once a year, or more often if there's a major change in your life. If you're self-employed or own a business, you might also have business-related expenses to cover.

Think about adjusting your policy when:
- Your salary changes
- You start or sell a business
- Your spouse's job changes

Making a Savings Plan You Can Stick To

Whether you're trying to get out of debt, save for retirement, or accomplish any other financial goal, you need a plan. Making a plan you can stick to takes several steps:

1. Know where you are now. Before you do anything else, make a quick list of all your goals. This is also a good time to start tracking your spending and list out any debts you might have.

2. Prioritize your goals. Think about which of your goals are most important to you and which are the most urgent. Fund the most important first.

3. Break up big goals into smaller ones. Dividing up a huge goal gives you more victories to celebrate, and also makes the goal feel more real.

4. Keep it realistic. It's better to meet a good goal than fall short of a great one. If you do a thorough job on the first two steps above, you'll have all the information you need to create workable, realistic goals.

5. Be open-minded. If you don't have enough money to meet your goals, you'll need to tweak your plan further. You might need to change some of your money habits or adjust your goals, or both.

6. Examine and readjust. Once you've put your plan in motion, keep an eye on it to make sure it runs smoothly. It's good to revisit your goals a couple times a year - to tweak them or just inspire yourself.