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F iNANCiAL F iTNeSS Experts offer tips on getting budgets in shape

October 20, 2005 1:06 am

Consumers' financial pants are feeling a little snug, as their spending habits stretch the capacity of their wallets.

Nationwide credit-card debt is bulging in the trillions. And many people continue to splurge rather than save.

But local experts hope that an increased emphasis on fiscal fitness will encourage people to trim their debt and beef up their financial muscles.

America's financial health is in stable--but serious--condition, said Bruce McClary, corporate trainer and certified credit counselor for ClearPoint Financial Solutions. His Richmond-based firm has a local office on Princess Anne Street.

"I don't think that everyone is doing everything they can to limit their credit spending and increase their saving," he said. " that trend really needs to be reversed."

In honor of Virginia's Financial Fitness Week this week, state and local organizations are accelerating their efforts to educate consumers on money management matters. Here are some ideas to improve your financial health:

Getting fiscally fit is a process, said Rick Burleson, president of Burleson Financial Strategies in Fredericksburg.

As people who want to lose weight plan how many pounds they want to shed, those working toward financial success should set realistic goals for getting there.

Attaining financial ambitions is much easier when consumers know what they are.

"It's having the awareness of what it is you want to do and that there is a light at the end of tunnel," Burleson said. "And you just keep your eye on it."

Some people want to buy a house.

Others want to make sure they have money to survive after retirement.

And many just need to reduce debt and learn to live within their means.

But accomplishing those things, he said, is usually a matter of altering spending habits.

As midnight snacking and binge eating won't do anything for a person's diet, impulsive spending can put a dent in a household budget.

Buying a cup of coffee and doughnut every morning or going out for lunch every day may be small costs individually. But they add up.

McClary says his agency encourages consumers to control spending by following a budget and limiting credit-card use.

A budget shows people how much they can afford to spend on entertainment and luxury items after their bills are paid.

But even those who outline such a plan don't necessarily follow what it says they can afford, McClary said.

Now that fast-food restaurants and other traditionally cash-only merchants are starting to accept credit cards, he said, it is easier for people to spend when they don't really have the money.

Many experts say credit cards should not be used for anything you can eat, drink or wear. And if possible, they should just be used in emergencies.

"Pay attention to the details in your budget and spending pattern," McClary said. "Once you track expenses, you can then identify areas where you can go in and make adjustments."

The hard part of any fitness plan, however, is sticking to it.

Just as someone on a diet can regain weight when they go off it, consumers may feel the consequences if they stray from healthy financial habits, said Daniel Bender, an accountant, finance specialist and financial planner for PBGH in Fredericksburg.

"It's not like you can do one or two things and then take the rest of your life off and expect to stay fit," he said. "People look at budgeting and think it is understandable. But how many [people] actually stick to that plan is less than we might expect."

Consumers need to set goals and spend efficiently, experts say. But they also need to have three to six months of living expenses in savings.

Burleson said everyone should sock away a portion of each paycheck and look at bonuses and raises as an extra chance to save--not spend. Those without such funds run the risk of going into debt should an emergency, such as job loss or home maintenance, come up.

"The worst thing you can do is say, 'Well, it is too late,'" Burleson said.

Once a savings account is established, people can then move on to grow their money in other investments.

Building a financial foundation is like strengthening muscles, Burleson said.

In the gym, you start with the small weights and eventually you can bench press much more. In the financial world, you start with low-risk accounts that have low rates of return. Eventually, your income can tolerate higher risk accounts that can offer a larger return.

While savings should always be the first step, Burleson said, everyone should invest something in a diverse portfolio of accounts when the cash is available.

A savings account will meet short-term financial needs. But other options such as retirement accounts, the stock market or life insurance secure long-term financial success.

And if what you are doing isn't working, you can always seek professional help.

People have varying degrees of financial education, McClary of ClearPoint said.

Some are deep in debt and don't begin to know how to climb out. Others have always been careful with their money, but may need advice on how to invest properly.

Regardless, financial planners, accountants and other counselors can look at what consumers are doing and tell them how they can better work toward their goals, experts say.

Such specialists advise clients on healthy financial habits so that they can implement strategies on their own.

"It's kind of like having a fitness trainer to help you get back in shape," McClary said. "Having someone to help guide you is definitely a good option that people should take advantage of if they don't know where to start."

To reach MEGHANN COTTER: 540/374-5434 mcotter@freelancestar.com