4 Family Financial Resolutions for 2010
 By Terry M. Blair

Perhaps there’s been one silver lining to the bumpy economic road our nation has traveled over the past couple of years: Most Americans are now more focused on improving their family finances than they’ve ever been before.

The beginning of a new year presents a unique opportunity to make plans and set goals in relation to your family’s finances. Here are a few suggestions to get you started.

1. Create a budget—and stick to it
This is the first step to improving finances for most families.

It’s easy to put off because many people chafe at the idea of living on a budget. But without one, it’s difficult to establish family financial discipline.

Start by making a list of all of your family’s set recurring monthly expenses, like your mortgage, car and home insurance, and utilities.

Then make a list of the average amount you spend in a typical month on variable expenses such as auto repairs, entertainment and groceries.

Add these two lists together. The total amount should not exceed your monthly gross (or take-home) income.

If it does, you’re probably going into debt each month just to make ends meet. If it doesn’t, look for opportunities to save or invest the extra.

You may be able to reduce your costs of auto and home insurance by turning to AFS. Through your membership, you have access to special program rates on auto and home insurance from Travelers. You can get a fast, no-obligation quote with one phone call.

And your AFS Membership can help you save even more with these and other valuable benefits:

• Auto Coupon Book
  Save on repairs, parts, batteries, tires, brakes, mufflers, shocks and more
• Grocery Coupon Order Book
  Save thousands off your grocery bill
• Working Advantage
  Discounts on entertainment, travel, shopping and more

2. Pay down debt
If you’ve accumulated a high volume of consumer debt—whether via credit cards, student loans, home equity loans or car payments—resolve now to start whittling it away this year.

Start by attacking the highest interest debt first. For most people, this is credit cards.

Set a goal of eliminating all consumer debt by a specific date that’s realistic for you. Then get everyone in your family committed and on board.

Most importantly, don’t use any more consumer debt—this includes shredding your credit cards if you have to.

3. Build an emergency fund
Most financial experts recommend that families have between three and six month’s worth of living expenses stashed in a no-risk, highly-liquid savings account, like a bank or money market account. Whether this should take priority over paying down debt depends on how much debt you have, how much interest you’re paying, and whether your employment is steady.

If you’re paying high interest rates on large credit card balances, for example, it might make sense to concentrate on paying this down first.

But if you’re uncertain about your future employment prospects, then it might be wise to focus on building an emergency fund in case you lose your job.

4. Renew or increase retirement plan contributions
Maybe you had to stop contributing to your retirement plan last year, or reduce the amount of your contributions, due to a tighter family budget. If so, resolve to start making contributions again, or bumping them back up to where they were or maybe even higher, as soon as your budget allows.

Time is your greatest ally when it comes to saving for retirement, and time lost when contributions weren’t made can never be recaptured.


(Posted January 2010)

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