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Your Guide to Family Finances

Nine tips for riding out the rough 'bear' economy – and setting good money examples for your kids, too

While putting off a financial reality check may make sense today, it won't help improve your present situation – or prepare you for the future. By evaluating and adjusting your family's finances, you'll feel in better control of your personal economic situation – even when it's less pretty in the state or nation.

1. Be realistic about your budget. If you don't have a written budget, sit down with your monthly bills and figure out what obligations aren't negotiable (fixed) – mortgage, life insurance, car payments, utilities, etc. – and what costs vary (discretionary) – food, clothing, cable, entertainment. Try tracking all your expenses for one month to get a clearer picture of your spending habits.

2. Save creatively – involve the kids. Beyond clipping coupons and shopping for discounts, what can you do? Ask your kids; you might be surprised by their solutions. Maybe an older child can teach a younger child to play piano instead of paying for lessons. Or maybe they really don't like soccer or band. Remember: Just like parents, kids feel more at ease when they're doing something to help!

3. Build an emergency fund. Whether your income is stable or not, put aside money in case of financial hardships down the road. Ultimately, you want to have at least three months of living expenses (non-discretionary) set aside. Start with a small goal of working up to one month of cash reserves; then continue saving.

4. Look at your pay stub. A quick way to boost cash flow is to adjust tax withholdings, says Jonathan Nalon, a consultant with Hantz Financial Group in Southfield. These act as a fund you contribute to that goes toward your eventual federal tax bill. Change the amount to have more take-home pay, but keep in mind you won't receive a big refund check. Check out the IRS Withholding Calculator to see if it figures.

5. Avoid missing payments. Nalon cautions against intentionally missing mortgage payments. The thinking goes, if you skip because payments have become more difficult to cover, lenders will reduce the costs. But Nalon says this can negatively impact your credit score for years. "In the long run, you may be paying a higher percentage on loans you secure. Those higher interest rates will cost you." Call your lender to explore other options.

6. Open your mail. Do you even remember what kind of fund you checked off for your 401K? Evaluate your investments on a regular basis. Financial planners often recommend quarterly – or figure a trigger, like when you reset your clocks for daylight savings time. Start off by looking at your most recent statements (ask HR or call the investment company directly). Look at what risk category your investments fall into: aggressive, moderate or low-risk. You may want to "rebalance" your portfolio to reflect your risk level.

7. Call your creditors. Your mortgage bank, auto lease company and credit card lenders may be willing to work with you. Call! Often, creditors have a special department devoted to hardship cases. They may lower payments or interest rates on outstanding balances. And try back in about a week if your first call doesn't go well, says Michael Goodman, a CPA with Wealthstream Advisors in New York City. "You may talk to another person who is more willing to work with you – or even ask to talk to a supervisor. People tend to assume they have no bargaining power. That's just not true."

8. Get help. Several organizations offer financial services for a fee – or even free. Be careful; scams abound. Goodman recommends two strategies. First, educate yourself with helpful consumer websites like the American Institute of Certified Public Accountants (AICPA). Second, seek out financial planners from reputable sources like the AICPA, National Association of Financial Planners or National Foundation for Credit Counseling. If you have a consultant who prepares your taxes, he or she may provide some financial assistance for free or at a low hourly cost.

9. Think historically. This isn't the first time the economy has shrunk and home prices plummeted. After a time of recession, the economy eventually strengthens. But don't wait for that to get in control of your finances. Remember why you're saving: For your family's financial future (think: retirement and college) – and peace of mind today!

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