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Small Steps for Successful Money Management

March 2011

Barbara O’Neill, Ph.D., CFP®
Extension Specialist in Financial Resource Management
Rutgers Cooperative Extension

Want to feel a better sense of control over your finances? Get a good handle on your income and expenses. Not sure how to get started? Consider the following small steps:

  • Track your income and expenses for a month or two to get a realistic view of your current cash flow. Most people underestimate small daily “variable” expenses (e.g., food and gasoline) that add up over time. Carry around a small pocket notebook and record every expense as it happens. Include all methods of payment including cash, check, credit card, and debit card. If you’re handy with a computer, create a spreadsheet to categorize and total expenses.
  • Develop a spending plan (budget) based on your income, expenses, and financial goals. A spending plan does not prevent you from getting what you want. It helps you get what you want. Rutgers Cooperative Extension has several online resources. Download a worksheet that can be completed with a pencil and a hand-held calculator, or download a spending plan spreadsheet that uses pre-programmed software to make calculations with a computer.
  • Arrange a system for handling money and make sure all adults in your household understand the system. Some people use “old fashioned” paper and pencil record-keeping systems, while others use computer spreadsheet programs (e.g., Excel) or budgeting Websites such as
  • Decide what your family’s most important financial goals are. Ideally, money should be spent for things that mean the most to your family’s welfare and not wasted on things that are not important. If family members want many different things, list them in priority order.
  • Try to save 10% of your gross income. If you can’t manage 10% right away, try to save a smaller amount, but do so regularly. Increase your savings when family income increases and/or when household expenses end or decrease (e.g., child care and car loan payments).
  • Include all family members in financial planning decisions. If every family member understands the family goals, they will work harder to achieve them and a financial plan will have a better chance of success. Major purchases (electronic equipment, vacations) should first be discussed and mutually agreed upon.
  • Don’t give up. If, at times, you fail to stick to your spending plan, don’t throw up your hands and quit; stay with it. You will succeed if you are determined to succeed. It usually takes 3 or 4 months to get used to living on a written spending plan (budget).
  • Review your spending plan periodically. Let everyone in the family know where it has been successful and where it has not. Consider how to handle expenses that exceed the budgeted amount.
  • Make up your mind to stick with your financial plans and budget over the long term. What we think about, we bring about. Be flexible and make changes, however, if your financial situation changes or you see ways that your plans can be improved.