Top 5 Smart Money Moves !

1. Create a Budget: Nearly half of American families spend more than they earn each year, according to the Federal Reserve, plunging them further and further into debt. That's why it's imperative to create a budget, says Judy Lawrence, author of "The Budget Kit." Make a list of your fixed costs, like your mortgage or rent payments. Then add that to the total amount you spend per month on such things as utilities and taxes. Together, these expenses shouldn't surpass 35% of your monthly take-home income, says Lawrence. Meanwhile, car loan and insurance payments, as well as car maintenance costs shouldn't exceed 24%. Next, add up any regular monthly expenses that regularly fluctuate in price such as a cellphone and grocery bills. Once you've tallied up all of these costs, you'll know how much money you have left to spend on miscellaneous expenses like dining out and shopping.
2. Build Up Savings: In times of uncertainty, it can be a life saver to have a savings cushion. After all, no one knows when they may be faced with an emergency or the possibility of getting laid off. To feel confident that you can financially weather anything that comes your way, you should have at least three to six months worth of expenses socked away, says Jane Newton, a fee-only certified financial planner at Chatham, N.J.-based RegentAtlantic Capital. The best way to build up your savings is to pay yourself 10% of your take-home salary each month before you pay your bills, says Newton. Set up an automatic deposit, which will transfer that amount from your checking to your savings account each payday. That way, you won't be as tempted to touch the money. Consider stashing your cash in a high-yield online savings account like those offered by HSBC Direct and Emigrant Direct. Although their interest rates have been dropping -- they're currently 3.05% and 2.75%, respectively -- they're still higher than the rates at most major banks. High rates can be found at the bricks-and-mortar banks as well, but they'll come with a slew of restrictions. Washington Mutual and Wachovia are now offering savings accounts with 5% rates. But there are limits to how much money you can put into these accounts and how long these rates will last. There are also rewards checking accounts offered by small community banks and credit unions that carry yields as high as 6.26%. But you'll need to do all of your banking online and you must make a set number of debit transactions each month.
3. Tackle Credit-Card Debt: If you're not aware of the credit crunch yet, you will be soon. Faced with a growing number of delinquencies, credit-card companies are tightening their lending standards on their delinquent and responsible card holders, subjecting them to decreased credit lines and skyrocketing interest rates. This means that getting out of debt as soon as possible is more crucial than ever. The most important tip to keep in mind is to not be late or miss any payments. "In this economy, credit-card companies won't hesitate to raise your interest rate if you're late on just one payment," says certified financial planner Sheryl Garrett. They may also notify the credit bureaus, which could result in higher interest rates on all of your cards -- not to mention any loans you may want to take out in the future like a mortgage. Start by paying down the balances that are easiest to tackle, says Garrett. You'll see results faster, and you'll be motivated to deal with the more challenging cards, she says. Keep in mind that a quick way to pay off some of your debt is by putting any income that's separate from your salary -- like your tax returns or any salary bonus -- toward it. You should also call the credit-card companies to negotiate better rates on your credit cards.
4. Plan Your Retirement:Between putting money into savings and paying down all your debts, it's easy to see why retirement planning is often put on the back burner. Even if you have just a little money leftover each month, it's important you start contributing to your 401(k) as early as possible. Thanks to the power of compounding, contributions made earlier on in your life will have a longer time to grow and multiply. A 25-year-old worker who contributes $300 per month to his 401(k), assuming a 6% return and a company match of up to 6% of his salary, will have $920,142 at age 65. The person who starts at 35 will have just $470,043 by that age. If you can afford it, your 401(k) contribution should equal the amount required to get your company's full match, says Pamela Hess, director of retirement research for Hewitt Associates. Consider this free money that you should take advantage of no matter what. To keep your 401(k) properly diversified, you'll need a mix of both conservative and risky investments. If you feel uncomfortable choosing them on your own, consider signing up for a target-date retirement fund. These mutual funds are specific to each age group and become more conservative, moving from equities to bonds, as the investor nears retirement.
5. Estate Planning: You've worked hard to acquire your assets, and you probably plan on passing them down to the people you care about whether that's your spouse, children, or friends. But if you suddenly pass away without having planned your estate, there's no guarantee that your assets will be given to the people you intended them for. That's why it's important to start estate planning from the moment you have assets in your name, be it real estate, investment portfolios or cars. Prepare a list of all of your assets, and give it to a professional estate planner who, for around $200, can draw up an estate analysis, which provides an estimate of your assets' current value, says David Phillips, author of "Estate Planning Made Easy." Then, give the estate analysis to your attorney. As a rule of thumb, individuals with less than $100,000 in assets should opt for a will whereas those with more than $100,000 should go with a trust. With both a will and a trust, you decide who gets which assets and if that person will receive them in a lump sum or in increments over their lifetime. However, with a will, after you die the court will have to determine if it's valid before your beneficiaries can receive your assets, which can tie the process up for months, says Phillips. Keep in mind though that if you have any outstanding debts at the time of your death credit-card companies and banks can take what you've owed them, leaving your heirs with a smaller estate than you had planned.