One of the best tools to secure your future financial health is creating a monthly budget and sticking to it! It helps you see where your money goes and trim unnecessary expenses.

Before creating a budget, first determine your financial goals -- saving for retirement, purchasing a new home or car or saving for your child’s education.

Next, set up a monthly transaction sheet and write down all of your expenditures for three months. And that means every transaction, even the daily cup of coffee and donut before work. After three months, compare your cash inflow with your cash outflow.

You may find that a lot of your cash outflow goes to credit card payments. Make a list of all of your credit cards, putting the ones with the highest interest rates at the top. Develop a plan to pay off these debts as soon as possible. You may want to destroy all but a couple of the cards, keeping those with the lowest interest rates. (It might also be a good idea to bring your children in on the budget planning process to make them aware of using credit cards wisely.)

Make your credit card payments on time in order to avoid costly late fees. The Independent Bankers Association of Texas reminds you that Texas-issued credit cards have limits on fees, so look for local bank issued cards. Many credit card companies allow you to pay online, so you don’t have to rely on the post office getting your payment there on time. Additionally, some banks now offer their customers a new service called "telephone initiated debit." This allows you to call your credit card company and give them your checking account and routing numbers over the phone. Your payment can then be instantly deducted from your checking account and save you a late fee.

Another "budget buster" can be ATM withdrawals. Try to visit the ATM just once a week and make your money last for the whole week. Also, use your own bank’s ATMs to avoid fees.

As part of your budget planning process, create an emergency fund for those unexpected expenses such as illness, job loss, car accident or home repairs.

Most experts advise saving ten percent of your income for emergencies. If this is not possible in your particular circumstances, don’t be discouraged. Save what you can. Saving is a discipline and the more often you do it, the easier it becomes.

Many computer programs now offer budget software that makes it easy to set up your personal budget. Be aware that a budget isn’t designed to make your family do without things in the present, but rather to help secure your financial future. You may even find that a monthly budget actually improves your present cash flow.

Interested in learning more about improving your personal financial situation? The Federal Reserve Bank of Dallas has a booklet called "Building Wealth" which is available from its Public Affairs Department at 214/922-5276 or online, you can download the booklet at: www.dallasfed.org/htm/pubs/pdfs/ca/wealth.pdf.

Provided as a public service by First Commercial Bank and the
Independent Bankers Association of Texas (IBAT). 

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