Put more money into your pocket this year - Money Talk$ - Brief Article

THE New Year's Day celebrations are over and the resolutions have been made. Now is the time to act on at least one of those resolutions: Put more money into your pocket and make sure you end 2002 richer than you are today.

How you achieve that goal, experts say, depends on how you approach it.

"Putting more money into your pocket for 2002 is really going to be an individual responsibility," says Kevin Hampton, a financial consultant at A.G. Edwards & Sons in Milwaukee. "Watching what you buy, properly budgeting your money and properly investing your money--all of this is your complete, personal responsibility. No one can do it for you."

The following are some money-saving tips to help you put more money into your pocket.

CREATE ROOM IN YOUR BUDGET

The first thing to do is to find out where you stand financially and where your money is going.

Percy Bolton, president of Percy E. Bolton Associates Inc. in Pasadena, Calif., and a certified financial planner, says getting control of your cash flow is the most important thing to do this year. "You have to know where you're spending money and you have to know where your money is coming from," he says. "You really have to get control of your cash flow because if you don't know what those numbers are, there's no way to get improvement in those numbers."

Marilyn Broussard, senior financial advisor at Waddell & Reed in St. Paul, Minn., and a certified financial planner, suggests that you track and write down your expenses for a few months. The results will probably surprise you and cause you to re-evaluate day-to-day spending.

"Once you have [the numbers] down on paper, look at the areas where the dollars are going, and choose where to cut back," Broussard says. "Most people can easily find additional dollars to save and invest."

After getting a handle on where your money is going, develop a realistic budget--and live by it. "It's not about constructing a budget; it's about sticking to the budget," Broussard says.

Trimming the fat off mandatory lifestyle expenses, such as housing, can also free up cash.

Interest rates are at their lowest point in decades, which makes refinancing your mortgage a sensible move. "Given the volatility of change in a person's life, you really can't plan 20 years out or 30 years out," says Bolton. "You have to plan five years out. So if you can reduce your payments by $100 or $200, that's $200 you can have to live a little better, based on a five-year scenario rather than a 20- or 30-year scenario."

Bolton advises consumers to re-examine all forms of insurance, which includes home, health, life, automobile and disability insurance. Shop around for the best rates, and, if possible, take larger deductibles to reduce the insurance cost.

INVEST WISELY

The economic boom of the last decade has come to an abrupt halt, but there are a lot of ways to make money through investments. No matter what the circumstances, always pay yourself first. "Don't believe the hype," Hampton says. "In every situation, there's an opportunity. When the stock market is going down, there are other opportunities. You can make money if you know how."

First, make sure your assets are properly allocated in various investment categories, such as bonds, stocks, stock options, and mutual funds, Hampton says. Investing in mutual funds, Broussard says, has a key advantage. "Many mutual-fund companies have low minimums," she says. "One of the [good] things about mutual funds is that even people with very modest incomes can participate in the returns that are available in the securities market."

In dealing with stocks, steer your investments toward dividend-paying shares, which are usually offered by large companies. For example, if the company says all shareholders of record before January 1 receive a dividend, all shareholders who purchased the stock before that date receive a dividend.

"Some solid companies pay a hefty dividend," Hampton says." You have to be of record when they declare the dividend."

For 2002 and beyond, Hampton says, make sure you maximize retirement investments such as 401(k) accounts and individual retirement accounts. They are tax-deductible, and for those with employer-sponsored programs that match contributions, they offer free money.

DARE TO BE DIFFERENT

In most cases, the biggest obstacle in achieving financial wealth is not a lack of income; instead it is living above your means and letting money slip through your fingers. "All of the people I've come in contact with who have been financially successful are successful psychologically," Bolton says. "They don't mind being different; they don't mind saying no; and they do not need to have conspicuous consumption to reaffirm their own self-worth."

Even in these uncertain times, experts say, you can reach a higher financial level in 2002 if you make a plan and follow it for the rest of the year.