Recovery tips for a financial hangover

For most people, early January is a time for resolutions. Pledges to exercise, diet and be a better person often top the list.

But as we emerge from the recession - from which many of us are still reeling - it's time to look at changing and evaluating financial habits, experts say.

Many suburban financial planners are recommending that their clients be careful in 2010. "Nothing right now is for sure. You have to be cautious," said James Platania, owner of Financial Network Investment Corp. in Mount Prospect. "Things are ugly."

Platania and smartaboutmoney.org recommend 10 resolutions for 2010.

1. Cut down on spending: If you spend less you'll have more money available to pay down debt and save for the future.

2. Keep a spending journal: Keep track of how much money you're spending throughout the day. You'll be surprised at the amount of money you're spending on coffee, lunches and other nonessential items. "You'll see how much money is falling through the fingers of your hands," Platania said.

3. Plan ahead: If you're in the corporate world and if you're concerned with job security, plan for a possible job loss. A family should have at least six months of living expenses in the bank, just in case of an emergency.

4. Clean house: The beginning of a new year is the perfect time to get organized and develop a budgeting process. Tips are available at smartaboutmoney.org.

5. Evaluate college planning: Those saving for college should re-examine investments. If you have a high school student, the plan should be more conservative than if you have a kindergartner.

6. Boost retirement savings: If your employer offers a 401(k) plan, increase your contributions. If you don't have a plan, open an Individual Retirement Account and arrange for contributions to be made automatically from your checking or savings account.

7. Protect yourself: Be prepared for the unexpected by making sure you, your family, your assets and your investments are insured and fully covered. If you do not have a will, make 2010 the year you establish a life plan.

8. Pay down debt: This goes back to controlling spending. If you spend less, you'll have more money available to pay down debt and your mortgage.

9. Set goals: Write down long-term and short-term financial goals and pull them out throughout the year.

10. Save, save, save: The financial crisis, pay cuts and layoffs may have forced you to dig into emergency spending accounts. It's time to replenish. Start by saving just a little every paycheck and then strive for 10 percent of your income to go to savings.