33 WAYS TO IMPROVE YOUR FINANCES IN 2011

By Sandeep Datta

All of us wish to save, but not many of us succeed in that. It is quite common hearing words like: “How can I save in this little salary? Or I barely manage to survive in this salary”.

What most of us fail to realize that it isn’t just how much big or small salary we get at month-end, instead it is more to do with how well we manage within our income following our personal approach to save money.

Following are some of the important ways to improve one’s financial life in 2011, based on the latest economic research and interviews with financial experts. These ideas, which focus on spending, saving, and earning, guide us about the tools for a complete financial makeover.

Whether you want to ramp up your earning power, finally start a retirement savings account, or just stop feeling like you're wasting money, now is the time to put together your New Year's resolutions.

So, want to have a complete financial makeover? Read on.

GOAL-SETTING:

1. Decide on your big goals.

2. Share those goals with other people.

3. Do a little every day. Take small steps toward your big goals every day.

4. Take time to reflect. Look back on 2010. What were your personal money highs and lows? What mistakes did you make and what challenges did you face? What financial decisions are you most proud of?

5. Develop a back-up plan. In today's economy, no job is 100-percent secure. Create a list of steps you would take if you were to lose your job, even though you hope never to have to use it. Having a Plan B can give you peace of mind as well as a practical "to-do" list if you ever face the shock of an unexpected job loss.

SPENDING:

6. Budget by the year. Research shows that budgeting by the year instead of the month makes it easier to stay within your spending limits. That's partly because when we create an annual budget, we remember to take into account occasional expenses such as gifts.

7. Keep a spending diary. Even if you just track every dollar you spend for two weeks, it will open your eyes to where your money goes and what you could cut back on. You might not realize that you spend $100 a week on lunches, or that your taxi-cab habit is eating up half of your discretionary income.

SECURITY:

8. Check up on your insurance. Do you have the auto insurance, renters insurance, and life insurance that you need? According to Allstate insurance, 2 in 3 renters skip insurance altogether, even though most people could benefit from the protection and it's relatively cheap. Life insurance is another awkward topic since no one wants to talk about death. But many people are under-insured, which puts their families at risk. Review the insurance that you have and decide whether you have the right amount.

9. Protect your privacy. Whenever someone asks for your Social Security number, question if it's necessary to share it. Never give it to a solicitor on the telephone or in an E-mail, and if you ever notice a suspicious charge on your credit card, follow up with your card company--it could be the first sign of identity theft.

SAVING:

10. Write down how much money you want to save by the end of the year. As with your other goals, the simple act of writing it down will help keep that goal at the top of your mind throughout the year.

11. Become a better cook. Sometimes you have to spend money to save money. Nowhere is that truer than in the kitchen, where investing in a few key pieces of hardware can help you cook better, faster, and cheaper. And anything that makes your food taste better and gets it on the table quickly can lessen the temptation to order budget-busting take-out. Consider investing in a slow cooker to make meals even easier.

12. Use less energy. Small changes, like closing doors to unused rooms or turning off the air conditioner during the day, can make a serious dent in utility bills. So can unplugging appliances, turning off lights, and shutting down computers at night. Even televisions can use power when they're turned off, so unplugging them when they're not in use saves energy.

13. Start making cleaning supplies from scratch. The Internet contains hundreds of do-it-yourself recipes; Jennifer Taggart's thesmartmama.com can get you started.

14. Find inspiration online. There are hundreds of personal finance blogs and websites; find the ones that speak to you and visit them regularly to help keep you on track. Popular options include Wise Bread, The Simple Dollar, and Centsible Life.

15. Give yourself a stress test. How vulnerable are you to sudden job loss or unexpected expenses? Do you have an emergency fund? If not, start building one. You should have at least three months' worth of living expenses in your bank account.

16. Work with family members. Sometimes, family members can help each other save more money by working together. You can also help out by gardening, doing housework, or sharing your computer skills.

INVESTING:

17. Begin investing today. Waiting to start a retirement account until you feel like you can afford it might mean that you can never retire. Don't put off opening a 401(k) account if your employer offers it, even if you start by contributing just 2 percent of your salary. Soon, you can raise that percentage to 4 percent, and eventually to 10 percent or higher. For extra motivation, plug your numbers into a retirement calculator on Bankrate.com, and see how much you need to fund your golden years--it's probably much more than $1 million.

DEBT:

18. Pay off your expensive debt, even student loans. Student loans that carry a 5 or 6 percent interest rate (or higher) are costing you much more than your savings can earn in this current low-interest rate environment. Paying off a chunk of your student loans will immediately start saving you more money than you could if you continue to make those slow-and-steady monthly payments.

19. Choose the best credit card for you. If you pay your balance off each month, you should have a card that gives you rewards points. If you carry debt, just focus on getting the card with the lowest interest rate. Most people have multiple cards that aren't suited to their needs. Pick the one that fits you best and stop using the other ones. Don't close them, though, because that can hurt your credit score.

20. Improve your credit score. The easiest way to do this is by making steady, on-time payments every month and otherwise keeping your accounts in good standing.

21. Make a plan for paying off high-interest rate debt. If you carry any credit card debt, auto loans, or high-interest student loans, it's time to come up with a plan for paying them off. With interest rates on savings account so low, it often makes more sense to unload your expensive debt rather than continuing to make interest payments.

RETIREMENT:

22. Know how much you need in retirement years. Run some numbers. Most people fail to calculate exactly how much they're on track to save, or how much they'll need, in retirement. Use free calculators from Bankrate.com.

23. Ramp up your retirement savings by a few percentage points. Those calculations might convince you that you need to start saving more. To keep anxiety (and a major budget crunch) at bay, increase your savings in small increments.

EARNING:

24. Invest in your career--even when you're being frugal (being economical or careful in spending) everywhere else. Investing in a career coach or development course can help you snag a promotion, get "unstuck" from a career rut, or transition into your dream job. Formal advice can come from meeting with more experienced colleagues over lunch or coffee.

25. Start earning extra money on the side. Many people don't realize they have valuable skills that other people are willing to pay for, such as a second language or even craft skills. To get ideas for how to earn extra money, check out the services section on Craigslist and see what people are advertising--editing, gardening, and event planning. Earning just a few hundred or thousands of rupees a month can help get you back on your feet, plus you'll get valuable job experience and the possible start of a successful small business that you can continue to grow.

26. Launch your own business. Have you always dreamed of being your own boss? Make this the year you start taking small steps toward that goal. Decide what you can sell, buy your website address, and consider taking on a few clients.

27. Use social media tools to boost your career. Making connections on Twitter, Facebook, and LinkedIn can enhance your overall profile in your field and strengthen connections that will come in handy when you're job-hunting. Many people err by not fleshing out their profile information on their social network accounts; start by adding more information about yourself, along with a photo.

28. Schedule creative time for yourself. Boost your productivity with scheduled downtime, in which you give yourself the freedom to brainstorm about new ideas and possibilities for yourself and your career.


GIVING:

29. Gift words of wisdom or good evening instead of expensive articles. When birthdays or other events come up, think about how you can give an experience, such as an afternoon at a museum or conversation over tea, instead of things.


30. Read a book or two to further educate yourself. Get some more in-depth knowledge" by traveling, reading, or volunteering. Studying up on your cause doesn't need to cost much money, but it will make you a more informed--and more effective--giver.

31. Talk with parents and siblings about any support you expect to give to them. It can help raise overall family saving. Giving doesn't relate only to charities; many people also support their aging parents and needy siblings. Make sure you understand what your parents or siblings expect from you, if anything, and that you can afford to provide them the support that they need.

32. Clean out your closet. Not only will you have a more organized space for the new year, but you probably have some valuable items--books, CDs, and games--that charities could make good use of.

33. Join forces with friends by forming a giving circle, a group of friends for any social cause for fun or an unforgettable joy.