Your personal expense plan is most likely set up on a monthly basis – the majority of your bills (credit card, mortgage, electricity) are monthly, and your income most likely comes monthly or biweekly. Also, if you’ve been keeping up your expense plan for a while, you most likely already spend some time each year looking back at how your investments performed and how much you were able to put away as savings. But what about your plans over the next several months – how can you track those?

Consider corporate budgets, which are reviewed monthly, quarterly, and annually; for publicly traded companies, official financial statements are released to the SEC for each quarter and year. This perpetual cycle of aggregating, analyzing, and releasing financial information forces companies to keep their budget plans squarely in focus, and it allows them to regularly view how they are doing versus short-, medium-, and long-term financial goals.

You can see the value of applying a similar, if slightly less complex, practice to your own financial planning. A review of your spending and saving every three months is a great way to do 3 things:

1. keep track of how you are doing on your goals
2. make sure that your budget still accurately reflects your monthly expenses
3. add flexibility to your goal-setting

Generally, a quarterly review helps you analyze your finances because, while one month may be unusually expensive, three months of data will represent a pattern.

Relying on the calendar year as the start of your quarterly cycle, then, the end of First Quarter 2009 will be March 31st. Plan to set aside a little bit more time than usual at the end of this month, and when you examine your monthly budget, take a look at January and February as well. Were any expenses consistently higher than you had predicted? Were you able to save more or less than you planned? Are you now 25% of the way towards your year-end targets?

Once you’ve analyzed the first quarter, take a few minutes to set some goals for second quarter. These goals can be whatever you like, from reaching a milestone in your annual plan to saving up some extra cash to spend on your summer wardrobe.

What are some goals you could set for next quarter?

So you’re planning a relatively large expense – a bicycle, a plasma TV, or even something larger like a car or a major home improvement. But the problem is that you already have other bills to pay, and there’s never enough money left at the end of the month for that purchase you have your eye on. So what can you do?

First, if you don’t already have a personal expense plan, make one for yourself. Create a monthly budget that shows your income, your expenses and bills, and a realistic amount for necessities like groceries and gas. What’s left over is your discretionary spending.

Second, open up a high-yield savings account. There’s no fee for these accounts at ING, for example, and they offer much higher interest rates than a savings account at your local bank. My ING accounts typically earn 4% interest, though since the start of the financial crisis it’s been more like 2.2%.

Third, and this is crucial, pay yourself first. It’s one of the hallmarks of personal finance wisdom. Essentially, set a part of your discretionary funds aside at the beginning of the month, right after you’ve gotten your paycheck, to save towards your goals. There’s a great post on this method here. By setting that money aside right away, you make your personal savings goals a priority over everything else, you get a psychological advantage of never seeing that money in your checking account, and you get to watch your savings grow steadily with each month. Plus, ING lets you open up multiple sub-accounts, which you can name and automatically divide your savings between them, so that you can open up a different sub-account for each savings goal.

For example: say you have $100 to save each month and you want to save $400 for a new bicycle and $1,200 for a computer. With 3% interest, if you save $30 towards the bicycle and $70 towards the computer, you can afford the bicycle in just over 13 months, and the computer in 17 months. And you’ll have earned an extra $30 in interest in that amount of time.
What strategies for saving towards a big-ticket item have worked for you?

Over the past few months, we have seen a huge change in the financial world. Loans are suddenly difficult to get, jobs are tough to find, and credit is hard to come by. The global financial crisis is making life very difficult on the consumer. Anecdotally, a friend of mine, with a 740 credit score, was unable to get a credit card with more than a $2,000 limit. If someone with a 740 credit score (well above average) can't get a decent credit card, what hope do the rest of us have?

Economists have even been theorizing that the next crisis will be because of credit cards. The New York Times writes:

"First came the mortgage crisis. Now comes the credit card crisis. After years of flooding Americans with credit card offers and sky-high credit lines, lenders are sharply curtailing both, just as an eroding economy squeezes consumers."

Almost all credit card companies are dropping or decreasing their promotions, tightening their standards, and making the credit process a lot more difficult for consumers. So why is credit important? At some point in your life, you will probably need to take a loan, a mortgage, or prove that you are trustworthy. In all of these situations, a decent credit score is extremely important.

Keeping your credit score high

Especially during a crisis like this one, keeping a good credit score is imperative. So, what should you do to boost your credit rating in a period of economic unease?

1. Check your credit report

The first thing you should do is get hold of your annual credit report, to make sure that all of your accounts are in check. You can do this for free, once every year, from annualcreditreport.com. From there, you can check your credit report at the three different credit-reporting agencies (TransUnion, Equifax, Experian). Note: You will only be able to see your credit report, not your actual credit score. You can see your credit score by signing up to a service through one of the agencies. I use TransUnion, which for $15/month updates me daily on my credit report and monthly on my credit score.

2. Pay on time

Make sure you always pay your bills on time. This is the most important step to improving and maintaining a good credit score. Paying on time is important, but so is keeping your debt load low. This means that you should NOT max out your credit cards. Lenders will see that you are close to your maximum on your credit cards, and they will deem you as a higher risk than someone who keeps their credit cards in check.

3. If you don't have a credit history, get a credit card

This applies to me currently: I cannot get very high limit credit cards because I am a student, and I have a limited credit history. In this case, I recommend that you open a credit card and take very good care of your account. Of course, as I mentioned earlier, now is a difficult time to get credit cards, so you may need to look into student credit cards or secured credit cards. Speak to your bank or check out creditcardguide.com to see some credit card offers that may help you.

If you follow these steps, and you manage not to spend too much during this current crisis, you might find yourself with a better credit rating by the time the economy begins moving upwards. Believe me: you will thank yourself for keeping your credit score high. Paying your bills on time and maintaining good credit is worth the time it takes.

Americans are famous for acquiring lots of material possessions, and I'm sure you've heard the quote that "He who dies with the most toys wins." Obviously this isn't true, but people continue to rack up possessions whenever they can. It's not a complete surprise when American shoppers trample each other for discounts on consumer electronics. But if we can't take it all with us, what's the point?

I've been traveling for the last year, and I discovered that I didn't really need that much: basically, everything I could fit into a couple of suitcases was sufficient for over a year of traveling. What did I bring?

• A few pairs of shorts
• 2 pairs of jeans
• A few T-shirts/long-sleeve shirts
• A few important books
• My guitar

Even then, I realized I don't need everything I brought with me. I brought less clothing on my second adventure (to Argentina, where I am currently), and I am buying them here. It saves me money (I don't have to check in as many bags) and it makes traveling much cheaper.

Trent at TheSimpleDollar had a similar idea: he wrote an article about The Suitcase Test. The Suitcase Test is essentially this: if you had to pack up and leave tomorrow, what would you bring with you? What are the most important things to your survival?

If you are about to buy some items, think: how much do you need it? If you wouldn't put it in your suitcase, do you really need it?

The best way not to overspend is to only buy things that you absolutely need. The Suitcase Test is a good framework to help you see what you really need.

Do you have similar strategies for limiting the number of things you buy or accumulate?

With banks failing, currencies crashing, and the economy wavering, everyone wants someone to fix the problem. Unfortunately, very few people really understand what is going on. Why is there a crisis, where did it come from, and how could it have been averted? Very few people know the answers to these questions.

To help you make sense of what’s happening, we've compiled the following list of resources that offer good explanations for the crisis. After reading them, you should be better able to understand our current economic situation than before.

1) The Visual Guide to the Financial Crisis

This guide offers a flowchart that shows the causes and effects of each part of the crisis. Also, the chart is pretty!

2) Understanding the financial crisis for non-finance majors

Mohamed Nanabhay gives a list of links that helped him understand the reasons for the financial crisis. Some of his links are excellent, including:

3) The Giant Pool of Money

The Giant Pool of Money is a radio show produced by NPR and This American Life. During the hour-long radio show, you will learn all about the origins of the crisis, such as why the housing market affects Wall Street, and why banks made half-million dollar loans to people without any income.

4) Can’t Grasp the Credit Crisis? Join the Club

The New York Times manages to both educate you and insult your intelligence with this article. The writer shows how rare any sort of understanding of the crisis is and gives a short explanation of what happened.

5) Understanding the Financial Crisis

Written by PhD Stephen Rose, this academic article offers an in-depth explanation of the causes and results of the current economic situation. It also explains how the failure of the markets was accompanied by the altruistic desire to help first-time homebuyers.

6) Obstinate Observations - Understanding the Financial Crisis

This three-part series delves deep by identifying the roots of the crisis as well as potential methods of solving it. There is a lot of valuable information in the three parts of this article.

7) Understanding The Financial Crisis--For Kids and Grownups

This family-oriented video helps explain the roots and causes of the economic crisis. It doesn't go too deep into its explanation (it's only 4 minutes long) but it's definitely interesting to watch.

We hope that these resources will give you a deeper understanding of the factors behind the current situation and various possible solutions to the crisis.

Have you found any other helpful resources you’d like to share?