By Jamie Vickers

MISSISSIPPI STATE -- Don't break a New Year's resolution to save money this year. Create a budget in six steps that helps manage money with careful planning.

"Successful money management requires planning," said Dr. Beverly Howell, family economist with the Mississippi State University Extension Service. "It also requires self-discipline and the ability to say ëno' to unnecessary spending, which is why saving money is an easy New Year's resolution to break."

The first of six steps to creating and staying with a budget is to determine goals.

"Goals give direction and purpose for spending," Howell said. "They motivate and encourage you toward doing things that are important to you and your family."

A list of goals, such as family or religious activities, recreation, savings, education and personal appearance, is important to a budget.

Goals should be written down, prioritized and categorized as long-term, to reach within 10 or 20 years; immediate goals, within five years; and short-term, within a year.

"These goals should be as specific as possible," Howell said. "They could include children's education, savings for retirement, buying a car or washer and dryer, establishing an emergency fund or buying a vacuum cleaner.

"It is also important to remember that goals change as size, age and income changes within the family," Howell said. "Establish realistic, measurable and achievable goals."

Calculating your living expenses is the second step to keeping the resolution to save money. Expenses should be classified as fixed, flexible or periodic.

Fixed expenses are set amounts paid in a defined period of time, such as mortgage, loans and credit card payments. Flexible expenses vary from month to month and may be controlled to some extent. Flexible expenses include food, clothing and gas. Periodic expenses occur about once a year, not monthly, and the best way to manage these is to divide the yearly total by 12 and set aside that amount each month.

"All of the family's current expenses should be listed as accurately as possible," Howell said. "Canceled checks, receipts and bills may serve as reminders, and remember the small expenses add up and can be important factors in developing a workable spending plan."

The third step, estimate your income, includes listing all funds that are expected during the coming year. Wages or pensions, interest from savings accounts, dividends from stocks and gifts are all included as income.

"If your income fluctuates sharply, as with seasonal workers, commissioned salespeople and farmers, it is best to make two estimates," Howell said. "Work out the smallest and largest figures that may reasonably be expected."

Step four, balance income with expenses, requires comparing income and expenses.

"A balance that is realistic and workable should be found for a monthly and yearly basis," Howell said. "This may mean cutting spending in some areas."

The fifth step is to develop a spending plan to cover any convenient budget period. A 12 month plan is usually preferred. Use a record-keeping book because it allows for categorized spending.

"Until you study your records, you may be unaware of overspending and poor buying habits," Howell said. "The MSU Extension Service has information which suggests overall guidelines for spending, recording spending and revising spending."

After each budget period, compare the amount actually spent with the planned spending amount. If unsatisfied with monthly or yearly spending, look critically at spending habits. This allows for ways to improve the next plan.

"Do not expect to have a perfect spending plan the first time you set up one," Howell said. "But expect improvement with each succeeding budget."

The final step in successful money management is adjusting to changes.

"Although you may be satisfied with your present plan, you need to change it from time to time," Howell said. "As circumstances change, you need to adjust your spending plan according to your new goals, needs and resources.

"With this budget, it is possible to keep that New Year's resolution," Howell said. "Saving money should not be a problem in 1999."