"Personal finance is an intimidating topic, especially if you've made mistakes in the past," says Michael McAuliffe, an adjunct instructor at Morton College and president of the nonprofit Family Credit Management. "But everyone has the opportunity to start fresh and make improvements. Your past missteps don't have to dictate your financial future if you resolve to be proactive today."
McAuliffe recently co-authored a financial workbook titled "Personal Finance Made Easy." Thanks to a grant from State Farm, the workbook can be downloaded for free at www.familycredit.org, or you can request a hard copy be mailed to you free of charge. You can use the workbook alone or pair with the free online video lessons. Topics covered include money management, savings, investing and more.
McAuliffe suggests 10 simple ways for you to start improving your finances immediately:
1. Stop, think, save - When out shopping, don't mindlessly pile things in the cart. Take a moment to stop, think what you really need, and save by not buying extras. Cutting unnecessary spending is easy when you make a habit of briefly pausing to analyze what you really need.
2. Cut 5 percent - If your employer cut your paycheck by 5 percent, you'd be unhappy, but you'd still be able to survive. Why not make that cut now? Reduce the extras like your daily latte or weekly visit to the salon and the savings will mount quickly.
3. Save - Every little bit counts when it comes to savings. If you save just $5 a day - the cost of a fast food lunch - you'll have $1,800 in a year. It's OK to start slow and build momentum. The ultimate goal should be to save at least 10 percent of your net income (income after taxes and other deductions).
4. Budget - It sounds simple, but most people don't have a solid budget. Create a spending plan now and stick to it. List all expenses and see where adjustments can be made. Refer back to your budget regularly to stay on track.
5. Keep multiple savings accounts - The less accessible your money is, the easier it is to reduce spending. Keep multiple savings accounts and pay yourself first. One savings account could be designated for an emergency fund, another for a new car or a future vacation.
6. Make it visual - Discourage overspending by reminding yourself why you are trying to save. A photo of your vacation destination, for example, illustrates what you're saving for; put it everywhere you spend money - wallet, computer monitor, vehicle, etc.
7. Make your money work for you - Consistent contributions add up over time, and thanks to the power of compound interest, the longer you leave your money untouched in a savings account or other investment, the more it can grow.
8. Home savings - If you own a home, you know it can cost a lot of money. Cut costs by doing home improvements and maintenance jobs yourself rather than hire out. Call your insurance agent and see if there is a lower rate for homeowner's insurance. Check into refinancing while rates are still low.
9. Manage checking accounts - You need a checking account, but are you really keeping track of your money? Online banking makes it easier than ever to balance your checkbook, track your spending and set up alerts when your balance goes under a certain amount.
10. Review your credit report - From mortgages and car loans to employment and renting eligibility, your credit report and score affect many aspects of life. You can review your credit report for free annually by going to www.annualcreditreport.com. Make sure you know what's on it and make corrections as necessary.
For more practical financial tips, visit www.familycredit.org and order your free "Personal Finance Made Easy" workbook. In addition to partnering with State Farm on this project, FCM received grants from Bank of America, Barclays Bank and AICCCA (Association of Independent Consumer Credit Counseling Agencies.)