How To Be Financially Fit in 2011

The New Year is the perfect time to start a new spending and saving personal finance plan. While keeping some lofty New Year's resolutions can be challenging, cutting your costs and working toward a stronger state of financial health is easier than you might expect.

Consider these five tips as you work on kick-starting your financial game in 2011.

Visualize Your Spending

Building a budget starts with knowing where your money is going.

"You want to track every dollar that you spend -- not just the check you write for rent but the small purchases, too," says Greg McBride, CFA, senior financial analyst at Bankrate.com. "Once you've done that, you're in a position where you can set some boundaries and identify opportunities to cut expenses."

You don't have to catalog your purchases with paper and pencil. With a range of online budgeting tools and software on the market, visualizing all of your financial data can happen on your computer screen or on your mobile phone.

"Simply seeing where all your money is going will change your behavior," says Aaron Patzer, founder of Mint.com and general manager of Intuit Inc.

Mint.com is a free service for online users that syncs with all of their banking-related account information. Users can track their money, set realistic budgeting goals, understand their banking account maintenance and ATM fees, and compare how their spending stacks up against national averages.

Plan To Be Sick

From prescription medicine costs to covering your co-pay for a visit to the doctor's office, getting sick can get expensive, even if you have solid health insurance coverage.

"Flexible spending is a great complement to your existing health benefits because you use it to pay for the items that aren't covered in your existing health care program," McBride says.

Flexible spending accounts use pretax dollars to cover these medical costs, helping you to increase the amount of money you take home. According to Bankrate's flexible spending account calculator, these help you pay less tax and increase your net take-home pay.

"We all have a certain level of expenses in the health category," McBride says. "A flex spending account is a no-brainer because it's like getting a discount on the expenses you're going to incur anyway."

To fully understand how these accounts can make a difference to your bottom line, Bankrate's flexible spending account calculator shows how they can help consumers cover dependent day care, out-of-pocket medical expenses, insurance premiums and dental work.

Reduce Unneeded Expenses, Save the Savings

Short-term savings translates to long-term success.

"The power of consistent savings compounded over a long period of time produces a significant sum of money," McBride says.

Consider McBride's simple savings example: Save $50 each month by trimming unnecessary expenses and put that money into a 401(k) or IRA. At 6 percent annual growth, you'll yield more than $33,000 over 25 years. Using Bankrate's spending calculator, saving $50 per month for 25 years at an annual rate of return yields $33,979 in 25 years (before taxes).

Think about your regular spending habits to recognize where you can cut your spending. Can you move to a cell phone plan with fewer minutes? Can you find a more affordable gym membership? Do you need that premium cable TV package?

Even if you struggle to identify opportunities that will dramatically reduce your monthly bills, the small steps can add up to a big difference. Use Bankrate's lunch savings calculator to see how a few dollars each day can spark an impact in the big picture of your finances.

Be Cash-Savvy

Could 2011 be your year to get smart about getting cash?

According to Bankrate's 2010 Checking Study, more than 99 percent of ATMs charge an out-of-network fee for use.

"It's not unusual for an adult to be paying a few hundred dollars of bank fees each year," Patzer says.

McBride offers advice for avoiding these fees altogether. From using mobile-based applications that help you find your closest in-network ATM to receiving cash back for point-of-sale transactions at grocery stores and drug stores, cash doesn't have to cost you.

Some consumers prefer using cash to help avoid unnecessary spending, but there are perks to relying more heavily on the plastic in your wallet.

"There are definite pros to being less cash-dependent," McBride says. "Debit and credit card rewards programs enable you to get paid on transactions you make anyway."

While Bankrate's 2010 Debit Card Rewards Survey revealed that more than half of the programs included had no annual fee, McBride warns that consumers can expect to see more fees emerge over the next year.

Go Coupon Hunting

Whether you do most of your shopping in-store or online, chances are you can pay less for many of your purchases.

From finding free shipping offers for cyber purchases to coupons for your grocery store shopping, you can search the Internet for promotional codes and discount deals.

"With the recession, shoppers had to learn how to shop smarter," says Jackie Warrick, chief savings officer at CouponCabin.com. "As the economy turns, I don't think people are going to pay full price if they don't have to."

While some sites offer as much as 50 percent off at restaurants, sporting events and other destinations, be wary of impulse buying.

"Daily deal sites definitely encourage spur-of-the-moment purchases," Warrick says.