I’ve talked before about whether or not you should hire an “expert” to help improve your credit.  While you’ve probably heard loads of ads and commercials about fixing your credit, there’s no easy answer or magic bullet.

The National Foundation for Credit Counseling (NFCC) and the Association of Independent Consumer Credit Counseling Agencies (AICCCA) have joined forces to strongly urge consumers thoroughly investigate and understand any debt resolution option before making a decision.

Keep in mind that it’s up to you to do your homework before doing business with anyone, particularly if it involves your finances.  So what should you keep an eye out for when looking for a reputable business?  They’ve created a tips sheet which you can download and reference before working with any company or agency.

You can find the download at www.westglen.com/online/Consumer_Information.pdf

I know, I know… you are sick of hearing about me talk about emergency funds.  So, this time, I’m going to let Real Simple talk abot it.

Click here for this great Q&A posted on Real Simple – “Should I Pay Off My Credit Cards, or Build An Emergency Fund?”.

I’ve talked a lot about teaching kids personal finance, and it’s a topic that I’m really passionate about.  Last week, I saw something that reminded me how important it is to always think about what your kids are learning, and what you are really teaching them.

My kids go to an enrichment center for classes, and they accrue points that can be used in the “store”.  Points are generally accrued for attending classes, and since this week was the last week of class, many of the kids were “spending” their points.

For the record, I LOVE this idea.  It’s a great way to show kids how money can be spent, and if they save their points, they can get something nicer.  So, while I was waiting for my kids to come out of the store, I was watching all of the kids come out with their loot.

Then I saw a parent drop off her kids.  She told the manager that her daughter told her that she was getting a Zhu Zhu pet for the last day of class.  She asked the manager if the teacher was giving them to all of the kids.  The manager responded that the pets were available in the store, but that they “cost” quite a few points.  She had to check, but didn’t think the girl had enough points.

“Just take care of it”, the mom said with a wave of her arm.

Yes, the center is expensive.  Yes, we don’t want to disappoint our kids.  But, just think about the message this sends…  It’s not a good one.

I tend to put all of my expenses on credit cards.  It’s a good way to build miles and points, and that’s how I have the opportunity to jaunt off on weekends away with my friends on occasion.

One thing I’ve learned from charging so much is that it’s really essential to be diligent in reviewing expenses.  I’ve had SO many errors over the years.  Here are some of the most common ones I’ve faced:

• Simple double billing – the card gets rung through twice.
• The “too-busy take out clerk” – we had one big error where a local sushi restaurant ran our card not only for our take out order but for another patron.  Since they supplied a signed receipt to the credit card company, the credit card company refused to refund my money until I threatened to cancel my card.
• The “fat-finger” – I’ve been charged $600 for stamps because the clerk hit too many zeros.
• The “oops, I was supposed to input the dollar amount, not the last four digits of the account” – yeah, that pregnancy ice cream purchase at my local mom and pop shop cost $75.

So look at your statements, and make sure everything is accurate.  I’ve found that the only credit card company that is consistently helpful in correcting errors is American Express – which is why I try to put most major expenses on that card.

I graduated with a double major in college – studying both psychology and economics.  It was a somewhat unusual combination, but I always thought it fit.  After all, there’s a huge impact of psychology in the world of economics.  Emotions and thoughts impact what you are willing to purchase, how much you are willing to spend, and when you decide to buy.

Psychology also has so much to do with personal finance, specifically how you, the consumer, perceive prices.

Spending $1000 on clothes sounds like a lot, doesn’t it?

What about $100?  Pretty reasonable, right?

What about $100 a week for 10 weeks?  Well, that makes things a bit more palatable, doesn’t it?  But it’s still the same $1000.

I hate spending $225 on my hair cut/color, but if I break up the appointment into two (cut and color) it sounds so much better.

When you spend money, think about the psychology of it.  Are you still spending a lot of money, just in a way that seems better?

Once upon a time, when you booked airfare, you could easily compare prices. That time is gone, and with many airlines now charging for bags and inflight services, you really do have to do a bit of analysis before deciding which flight is the cheapest.

Before you book, you should think about your optimal flight experience. Do you need an assigned seat? Some airlines, like Airtran, charge for that “luxury”. Are you checking bags? Jetblue and Southwest allow you to check bags for free (one on Jetblue and two on Southwest). That can really save you a lot of money if you have lots of luggage. Some airlines also charge for exit row seats while others do not.

So, the next time you purchase airfare, do a little advance work to make sure you get the best deal!

Earlier, I told you how to request your free credit reports.  Now that you have them, are you wondering what to do with them?

Each of the three reporting agencies report the information differently, so take a look at the format so you understand exactly what you are looking at.  Then, look at the high-level info, starting with your personal info.  Make sure that your name and personal info is accurate (if you’ve recently changed your last name, this is especially important).

Also review any information that’s considered “negative” (some of the reports break this out).  You’ll want to look for inaccuracies, as well as any potential fraud.

Then, take a look at each account.  Is the credit limit right?  Is the account yours (identity theft is very common)?  Is the payment information accurate?  Go through each one carefully, on each report.

So, what do you do if anything is wrong?  Well, you can contact the reporting agency, but you may also need to contact the individual creditor.  Remember that the creditors and agencies have any obligation to remove inaccuracies – not negative information but WRONG information.  In general, you should expect to spend at least an hour reviewing the accounts.

Have you checked your credit report lately?  Did you know that you can request free copies of credit reports from each of the three credit reporting bureaus annually? It’s important to review your credit reports, not only for fraudulent activity, but also for common, honest errors that can occur.

There are loads of companies offering these reports free, but there is only ONE official site.  The others generally try to bait you into purchasing more expensive, add-on services.  To get your free reports, visit the official site – AnnualCreditReport.com.  You should select all three reporting agencies – the information on each may be different, and all three are free (once per year).  You may be offered the chance to purchase your credit score – if you haven’t received your score recently, it may be worth purchasing, especially if you are considering a major purchase in the near future.

Next, I’ll talk about what to do with the credit reports.

I know that I’ve talked about emergency funds in the past, but I know that many people still don’t fully understand the importance (or don’t want to dedicate savings to that purpose).  I’d like to reiterate that without an emergency fund, it’s nearly impossible to stay on target with your financial goals.

Here’s why – emergencies WILL happen.  Whether it’s a lost job, damaged home, health crisis, or simply failed appliances, you’ll need to buy or repair something that you simply didn’t expect.  Where will that money come from?  If you don’t have an emergency fund, you’ll have to dig into savings, use credit cards, or borrow money.  That will affect your progress to your goals, and you’ll likely experience a set back.

But, if you have an emergency fund?  You can leave existing savings, such as college savings and retirement funds, as is, and instead use the fund.  Then, once the crisis is over, you can slowly start to rebuild the emergency fund.

Convinced yet?

One of the toughest jobs parents have to face is the responsibility of saving up for the family. It can be a difficult lifestyle to adapt into especially for first-parents. There’s also the misconception that savings is only for the kids’ college education when in reality, you can apply this into so many things.

You and the family no longer have to skip another fun summer getaway if you have a travel savings on hand. Every once in a while you and your spouse can splurge on couples’ time if you have savings for dates. Your kids no longer have to experience the usual hand-me-downs if you have savings for their other necessities such as clothes and school supplies.

Log Your Monthly Expenses

Before you begin creating your savings project, it’s important to set realistic goals first. Make it a point to log down every expense you’ve had for the previous month until the present. Distinguish them between bills and personal expenses. From this list, you can begin trimming off those which you can actually do without.

You can also make some adjustments on some of the expenses you have like travel. If you think you spend too much for gas then if possible, take some days off from using the car and just take public transportation to work. If the kids get too much allowance because you allow them to buy food in the cafeteria, then give them home-made meals on some days.

Just remember that these changes do not have to be implemented right away. If other family members will be involved and are likely to get affected, then make the changes slowly and gradually. Also, let them know why such changes are to be done.

Include Yourself in the Expenses

Most parents forget this when planning for a savings. This does not mean splurging on the first pair of shoes that catches your eye nor finally buying that SUV you’ve been eyeing all these years. What this means is that you also give yourself some practical amount of expense every month so you don’t end up feeling deprived and at the most unprecedented time suddenly feel the urge to splurge.

You should also include here starting your own savings fund such as a retirement package or saving up for health insurance. Aside from you, your spouse and your kids will also benefit from these life-savings programs.

Always Pay Your Debt on Time

Do not miss out on monthly debts especially if they are charged to your credit. Most people end up being drowned in debt because of the interest that builds up from it. Another way to counter this problem is to use your credits wisely. If it helps, leave the credit cards someplace safe and uneasy to reach so you would not get tempted to use them.

As you create your monthly expense log, most of these debts would fall under the bills section. Keep in mind that the bills are equally important with the personal expenses, if not somewhat more important. If you can’t pay for the month, make sure you track the interest rates or find a way to make even staggered payments just so you can avoid tarnishing your credit history.

Savings Guide for Parents was originally posted on the SaveBrite.com blog