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Key to financial health -- start saving more, track spending

The economy is making its slow way back towards health, but the recession has left a lot of people hurting.

It may not be easy, but most people's No.1 new year's resolution should be to save more money.

The National Foundation for Credit Counseling, considered the gold standard for credit counseling, surveyed experts from their member organizations around the country -- including Lutheran Social Service of Minnesota -- to ask them what their advice would be to others in these difficult economic times.

Here are their recommendations:

No. 1) Have adequate savings.  This was overwhelmingly the top tip, and for obvious reasons.

Americans might ask themselves how they paid for their last emergency. If it was with a credit card, that's a red flag.  A person who cannot afford an emergency is not likely to be able to afford the interest, late charges, and over limit fees that could be associated with adding to their debt load.

What is worth noting is that the NFCC's online December poll showed that consumers cited savings last among their New Year's resolutions goals.

There is a troubling disconnect between what the experts recommend and what consumers value.  

No. 2) Track your spending.  The only way you can know where your hard-earned money is going is to write down every cent you spend.

Do this for at least 30 days. Believe it or not, many people make incomes adequate to support their expenses, but end up short each month simply because they don't keep track of their spending.  

No. 3) Create a budget.  Budget is not a four-letter word.  If it helps, call it a spending plan.  The point is to be in charge of your money, not the other way around.

After you've tracked your spending, you'll be able to assign dollar amounts to each spending category.  This results in using your money to your best advantage.

No. 4) Get your credit report. Review it for accuracy and address any errors. Why? Your credit score is based on the contents of your credit report. Further, frequently reviewing your credit report is a good way to protect yourself against identity theft, as you'll be able to spot any suspicious activity.

Now that consumers are allowed one free credit report from each of the three bureaus every 12 months, there's no excuse for not obtaining it. Realize, however, that there is only one legitimate site, which is  

No. 5) Improve your credit score. Credit is becoming increasingly harder to obtain, but having a solid credit score will help you not only get the credit you need, but at a reasonable rate.

The two most important things you can do to improve your score are to pay your bills on time, and not utilize more than 30 percent of your available credit.

The new year is almost here -- why not make it a priority to get your financial house in order?