Whether you're debt free or ducking bill collectors, the tried and true pillars of successful financial management can help you maintain or attain financial security.
"Cash flow planning or budgeting brings clarity and purpose to personal finance," said Tracy L. Sherwood, a certified financial planner with Ogorek Wealth Management in Williamsville. "It is the key to financial success."
So determine your expenses, budget and stick to a spending plan, save and eliminate debt.
"It takes a lot of discipline," said Paul C. Atkinson, CEO of the Consumer Credit Counseling Service of Buffalo. "It can be the biggest challenge in the world."
Budgeting can be unappealing to many because it conjures images of an austere lifestyle without the joys of "wants." But financial experts say a successful budget should be balanced with sufficient "needs" and "wants."
"The budgeting process can be frustrating but it will give them a better understanding of how they are spending their money," Sherwood said. "If they are stressed by their financial lives, they need to get a clearer picture of their spending habits. Once they have a better understanding, they will realize they are in control and won't feel as stressed."
The Consumer Credit Counseling Service of Buffalo recently launched a personalized financial counseling program to aid residents in crafting realistic budgets and implementing other pillars in their financial lives. The coaching is $50 and includes up to three sessions that provide budgeting guidance, accessing credit reports, and tips to rebuilding credit.
At the height of the recession, the nonprofit agency had 12,000 clients; last year 10,000 residents sought counseling.
"Now we don't have as many in dire straits, but some are still in trouble, and the coaching is to make sure they don't get in worse trouble," Atkinson said.
The program is geared toward past clients who overcame their money woes and residents who are interested in preserving their financial security.
"If you get a lot of people coming in for preventive work as opposed to remedial, that's a good thing," he said. "It's like the health care business. If doctors can get you in to have check-ups every year and do healthy things, they don't have to see you in the ER."
The first step to financial health is knowing your situation: How much money is coming in and how much is going out. Atkinson said sit down with all of your bills and jot down all of your expenses, including miscellaneous, like gum and the daily morning cup of joe, because "everything adds up."
"You've got to get a grip on where you are," he said. Then you can find areas to cut costs and create a budget.
"Cash flow planning with a budget worksheet highlights how they are spending their money," Sherwood said. "Whether it's fixed expenses -- like your mortgage, car payment, taxes out of your paycheck or variable expenses -- shopping, appointments to the salon, hobbies. Once they can categorize and see the items that are fixed, they can determine where they could reduce costs."
Rent and car payments fall into the "needs" category, and bowling and vacations are "wants." The angst about losing fun activities in the budgeting process is eliminated because you'll know your disposal income from creating a budget.
"You'll know what you can spend," he said. "But if you don't know what you have as disposable income, that's when you have problems."
Budgeting options are many. The Internet is loaded with free calculators, spending tracking analysis, spread sheets and other tools. But the old-school, low-tech method of slipping cash in designated envelopes each pay period for each expenditure still does the trick for many.
Spending categories should also be properly funded in budgets to ensure you are living within your means. Financial advisers generally recommend saving 10 percent of your income, using 25 percent for housing, 10 to 15 percent for transportation, 15 to 20 percent for food, and 5 to 10 percent for entertainment. Funds totaling six months of living expenses should be put aside, and a percentage of income, depending on your age, should be used for retirement planning.
Atkinson said it's important to monitor your credit report to catch any mistakes by taking advantage of the free reports offered each year by the three credit bureaus.
"If you haven't looked at your credit report in years, you don't know what's on there," he said. "If there are mistakes, you'll have the time to fix things before disaster falls, not when someone has their boot on your neck."
Those with damaged credit can improve their history gradually by paying bills on time and limiting the number of credit cards they have. Also, Sherwood said to close out accounts with the highest rates and look into consolidating cards to tackle debt faster.
"The more cards you have, the more your money is spread out to make the monthly payments," she said.
Credit scores can be boosted by keeping accounts open but not using the card.
"It shows you're being prudent and not abusing it," Sherwood said.
To avoid living paycheck-to-paycheck or worst, financial doom, "get the most out of what you're making by living for today and saving for tomorrow," she said.