Amanda Taylor, News 9
OKLAHOMA CITY -- When it comes to our money, many people make one costly mistake.
"They don't realize how much money is going out the door until they sit down and look at it," said Oklahoma City financial advisor Jeff Baty with Eide Bailey and Associates.
The first step for 2011: sit down with your spouse and put together a budget.
"You're going to add 10 to 15 percent or more to your bottom line just by cutting out those little expenses you don't really need," Baty said.
We all need a little fun, so include entertainment and discretionary spending in your budget.
Step two: Build up a cash reserve in case you lose your job or there's an emergency.
"Something that's going to be an expense you just can't go into your pocket and pay," said Baty. "You're going to be able to go and get $4,000 to $5,000 out of the bank instead of using the credit card."
And don't just live in the moment either.
Step three: Invest in a retirement plan. The sooner the better.
"The one thing I can't get back now is time," said Baty. "If I wait a year or two or three, that's growth out of the market that I can't get back."
A good place to start is with your employer who will often match what you invest, essentially doubling your investment.
Step four: Review your insurance coverages-- auto, home and life.
"If you go and talk to your agent, say once a year and say, 'Hey, is my coverage adequate? Do I have too much? Do I not have enough?'" Baty said.
And finally Step five: commit to the budget you've talked about.
"Stay away from those things you want instead of, 'Hey, I need groceries. I need clothes,'" said Baty. "When you start looking at cutting expenses, cutting those high interest rates and investing the money, you're going to start talking about real money after awhile."
Baty also said once you start seeing a difference in your savings, don't spend it. Instead, use it to pay off debt.