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4 Major Steps for a Personal Finances Makeover


You don't have to be Suze Orman to figure out how to make your personal finances work better for you. When times get tough and people have to get by on less money, financial makeovers are all the rage. Regardless of your current debt or income situation, you can revise your personal finances and create a plan that contributes to a financially advantageous future:

1. Create a Budget

Sounds simple enough but most people don't track their income versus their expenses on a monthly basis. The only way you can control your spending and make money is to have a grasp of your full financial picture.

You don't need a fancy program or spreadsheets to create your monthly budget. Simply write down every expense you incur, including mortgage, insurance, taxes and utilities and compare it to your net (after taxes) income. Drag out the investment portfolio and integrate investments, including 401(k) and IRAs into the mix.

Although creating a budget won't give you the answers where you should go, it will tell you where you've been and perhaps where you've been too often (where you are spending the most money).

2. Remove Budget Items You Don't Need

Find the areas that you can live without and remove them. Morning coffee at Starbucks and lunch at a restaurant everyday can be replaced with making coffee at home and brown bagging it. Once you've removed "wants" from your budget, take another look and re-evaluate your expenses versus your assets and income. If you are still unbalanced toward the negative, make another sweep through the "wants" items until you are living within your means.

3. Examine Your Emergency Fund

Many smart savers have a rainy day or emergency fund in the event they lose their job or need extra money for an emergency. A family of four should keep no more than $15,000 in a rainy day fund. In order to grow your pile of dough, you need to place it in an investment vehicle that will amass more funds. Any excess money in an emergency fund should be invested in higher-yielding money markets, step CDs or short term bond funds.

4. Balance Your Investments

Depending upon your future financial goals, investors should keep their investment vehicles balanced among stocks, bonds and bank secured FDIC funds. You want to grow your dough at a steady pace without losing your shirt in the market. A 60/40 split between aggressive stocks (60) and safe investments (40) can keep the money train running, especially if you are age 40 or younger. Also, take advantage of any corporate retirement pension and contribute the maximum amount--many companies will match up to half of your contribution which can result in a snowball effect when its time to retire.

Anyone can adjust their personal finances based on their age and financial goals. Having a clear idea of your budget and staying informed of market and bank trends can help you make advantageous investments in the long run.


Gina Ragusa is a freelance writer and mom from sunny (and sometimes not) South Florida. Her 15 year experience ranges from writing about banking to tattoo parlors. Read more about her adventures at

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