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Ten Smart Financial Strategies

June 2012

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

While individuals can’t control what happens in the overall economy, they can control how they spend and save and plans for future financial security. Want to improve your finances? Consider these financial planning recommendations:

  1. Spend Less Than You Earn and Avoid Excessive Debt - If household income is reduced and/ or household expenses continue to rise, adjust your spending plan (budget) accordingly or prepare one for the first time. Rutgers Cooperative Extension has several online resources. Download a “paper and pencil” spending plan worksheet. Download a spending plan spreadsheet that uses pre-programmed Microsoft Excel® software to make income and expense calculations with a computer, visit.
  2. Be Future-Minded - Research indicates that, at every income level, people who are “planners” are more successful financially and feel better about their financial situation than those who do not plan ahead. Planners also experience less financial stress because the act of planning provides an increased sense of control. Planning for the future includes calculating the savings required to achieve future financial goals and addressing potential future challenges such as the cost of long-term care and estate planning. This worksheet will help you set specific goals:.
  3. Save and Invest Regularly - Make regular deposits to savings plans (e.g., 401(k) or credit union) available through your employer. Dollar-cost average by making regular deposits at regular time intervals (e.g., $50 a month) to purchase investments. In declining markets, you’ll buy more shares with your fixed deposit. The best way to save money for most people is to make saving automatic. This can be done through a tax-deferred employer retirement savings plan or via automatic investment plans for stocks or mutual funds.
  4. Protect Against Large Financial Losses - Purchase adequate insurance to protect against potential “big dollar” losses. These include disability, liability, catastrophic medical expenses, the death of a household earner or family caregiver, and major damage to, or the total destruction of, your home and/ or personal property.
  5. Reduce the Risk of Identity Theft - Request a credit report annually from each of the three major credit bureaus: Experian, Equifax, and TransUnion. See. Review it carefully and look for unusual listings which may indicate that credit accounts were fraudulently opened in your name.
  6. Follow Recommended Financial Practices - Studies indicate that many people do not put into practice actions that are frequently recommended by financial experts. These include making a written list of financial goals with a date and a price, setting aside 3 or more months of expenses for emergencies, calculating net worth (assets minus debts) periodically, preparing a will and living will, and following a written spending plan (budget).
  7. Build Human Capital - One of the best defenses against unemployment is to be a productive worker with current job sills that are in demand by employers. Consider taking courses to boost your “employability” and follow recommended health practices (e.g., diet and exercise) to reduce the risk of illness.
  8. Practice Tax Avoidance - This means paying the least amount of tax legally due to the IRS. Ways to reduce your tax bite include claiming the earned income tax credit (if eligible) and investing in tax-deferred investments (e.g., 401(k)s and IRAs) where income taxes can be postponed, often for decades.
  9. Develop Focus, Optimism, and Organizational and Negotiating Skills - All of these personal traits have been found in research to be associated with financial success. In addition, people who themselves as being responsible for what happens to them in life are more likely to take positive action (e.g., saving money).
  10. Know Where to Go for Help - It’s important to know where to find reliable information because personal finance topics (e.g., tax laws) are always changing. Online financial education resources available though Rutgers Cooperative Extension include the Web sites Personal Finance and Investing for Your Future. Another good source of information, with an online Ask an Expert feature, is the eXtension Personal Finance Web site at