Protect Your Pocket Series - Becoming Financially Fit in the New Year

Becoming Financially Fit in the New Year

(originally published December 2008)

Across Indiana, Hoosiers are gearing up for a New Year. For many, looking ahead to 2009 is a chance for a fresh start. They’ll cast New Year’s resolutions to overcome bad habits, lead a healthier lifestyle or volunteer more. The most common resolutions, however, often involve personal finances. And they should! Perhaps now more than ever before.

Money is the leading cause of stress for most Americans. The constant worry of paying bills, avoiding debt and saving for the future can often evolve into actual physical ailments. That level of stress has been even further heightened in many Hoosiers by the current economic climate. With corporations going bankrupt, a record number of homes in foreclosure and the stock market fluctuating daily, it’s no surprise that many New Year’s resolutions will focus on becoming financially fit.

Here are some tips to help you make healthy resolutions for your finances:

Create a budget. In order to manage your money, you have to determine where it’s going. First, calculate your monthly income. Next, estimate how much you need to spend each month on housing, groceries, utilities, gas, insurance and other items. In general, around 30 percent of your monthly income should go to housing, 18 percent to transportation and 16 percent to food. For help on creating your budget, we have tips at

Control your spending. After you create your budget, keep track of your actual expenses. My office has a balanced budget, and you should, too. But this doesn’t just happen. It takes discipline and diligence. If your expenses exceed your income, reevaluate what you’re spending your money on and find ways to cut back in your monthly, or even daily spending.

Be credit card smart. Credit cards can be a convenient way to access money to spend now without having to pay until later. It’s important, however, to not charge more than you can actually afford and to pay your bill in full each month. Most cards have interest rates that increase the total amount you end up paying if you don’t pay your bill on time. Even if you can’t pay in full each month, strive to pay more than the minimum payment to avoid additional fees.

Pay yourself first. In addition to budgeting for things like food and transportation, you should also consider your long-term saving and investing goals. Take advantage of your company’s 401(k) program or set up an Individual Retirement Account (IRA), if possible a Roth IRA, to start saving for your future today. To determine how much money you will need to retire and how much you should save each month to accumulate that amount, use the retirement calculators on

Investigate before you invest. Billions of dollars are lost every year to investment fraud. Before investing your money, make sure the investment and the person selling it are legitimate and registered with my office’s Securities Division. Certain mortgage loan brokers also have to be licensed with the Securities Division. Call 1-800-223-8791 or use the searchable databases on to check licensing and registration.

Becoming financially fit requires a change in your lifestyle. Be realistic with your goals. If you slip up one month and overspend, don’t panic. Instead, revisit your budget and focus on getting back on track.

Finally, consider relying on a friend or family member to keep you accountable. Bettering your money management skills is a long-term commitment and having someone there for support will increase your chances of seeing this resolution all the way through 2009.

Related Information:

- Visit Visa's Practical Money Skills site for tips on creating a budget

- Visit AARP's retirement section for more information on retirement

- Search loan broker database

- Contact the Securities Division