Stick With Financial Resolutions

About half of all Americans make New Year's resolutions. Some vow to use their gym membership or cut back their cookie intake. A lot promise to whip their finances into shape by paying down credit-card debt or increasing their savings contributions.

But statistics show that only about a quarter of us stick with our resolutions for more than a week or two. Most get caught up in the New Year's spirit, then lose momentum after they return to the daily grind post-holidays.

I won't tell you it's going to be easy, but it's also not nearly as hard as you think. Why? Because it goes back to one thing, and that's spending less than you make.

Here's how to get started:

Learn from mistakes. Before you move forward, you have to look back, especially if you spent the bulk of 2007 feeling strapped for cash. If you didn't have the foresight to track your spending at some point during the past year, you can still get a general idea of where your money went by looking at your bank and credit-card statements.

Fixed expenses are nonnegotiable; things like your mortgage, insurance and utilities. Variable expenses are just that, and that's the area where most people, if they work on it, are able to find wiggle room. If you're seeing a lot of, say, restaurants on your credit-card statement, go ahead and add up the charges. You may think that the odd $40 meal out doesn't add up to much, but you'll be surprised when you calculate the cost over a few months.

Make choices. This may come as a shock, but I'm not going to tell you to stop eating out. I enjoy going to restaurants, and much like a diet, if you completely deprive yourself of the things you love, a splurge will undeniably come along and ruin your hard work. The idea is to allow yourself some discretionary money - after the bills are paid and you've made contributions to savings - to spend however you choose.

So you can go to dinner or a movie, buy a new shirt or go to happy hour. Once you've identified priorities, set a few boundaries to keep yourself in line, advises Sabrina Lowell, a financial planner with Mosaic Financial Partners in San Francisco.

Put extra money to work. When your income increases, whether from a bonus, raise or tax return, the best thing you can do is pretend it didn't.

"When you get a bonus, put it into savings. When you get a raise, bump up your 401(k) contribution. If you pay yourself first, you're going to reach your savings goals," says Mark Stinson, a financial planner at Baltimore-Washington Financial Advisors.

Boost earnings. Your income needs to at least cover your fixed expenses, plus any curveballs that may come your way. If it doesn't, you need to look into either finding another job, increasing your hours or moonlighting on the side. Really take the time to assess your skills and figure out whether you're being paid what you're worth. If not, put yourself back on the market.

Hold yourself accountable. There are a number of programs that allow you to track your spending, the most popular of which is Quicken. There are also free similar programs online.

The two most popular, Wesabe (wesabe.com) and Geezeo (geezeo.com), will show you your bank account and credit-card balances, as well as how much you're spending on everything from food to entertainment to personal grooming.