Go to the grocery store. Pay bills. Buy clothing online. Oh my, where has all the money gone? Do you ever feel like money keeps flowing out and you're just not quite sure where it all goes? I know I feel like this at times. Keeping track of regular expenses is one challenge; another challenge is trying to fund long-term goals such as college education for children, down payment on a home, or retirement.

If you feel baffled by your finances, you're in good company. This year's Retirement Confidence Survey found that Americans' confidence in their ability to afford a comfortable retirement has plunged to a new low. Clearly the economic situation in this country contributes to this uncertainty, but all the new ways to manage and invest our money also may explain this lack of confidence. So, what's a person to do?

When I feel uneasy about our family cash flow, I find that using tried and true financial tools can decrease my anxiety, clarify just how much money I do or don't have to spend, and help me plan for saving. For example, a budget is a financial tool that lets you take control of your finances.

To build a budget, first list all your income sources. Many people use a monthly budget (including all income received in a month) but you can choose a timeframe that makes sense to you. If you're paid every two weeks, a two week budget may make sense.

Next, list all your expenses. It can be difficult initially to know how much you spend. For some expenses, such as rent or mortgage payment, check your last bill. You may be able to estimate expenses (such as food) by looking at your checkbook register or checking account statement. To truly know where all your money goes, though, you may need to track your spending and write down all purchases whether you pay by cash, debit card, or credit card.

Typically when I talk to people about building a budget, they know how much they pay for big items, like rent, but have a hard time remembering what they purchased with the last $20 they withdrew from an A.T.M. Small purchases can add up, and you need to track these expenses. You can track your expenses on an index card in your wallet, on your cell phone, or write it down each evening. Find a method that works for you.

The goal is to have your income equal (or be more than) your expenses. If when you build your budget this doesn't work out, then you need to consider making changes. Can you increase your income? Or, are there areas where you can adjust your spending? One of the wonderful things about tracking your expenses is that it can be very enlightening. Take a look at what you're actually spending money on, and ask yourself, "is my money going towards my goals and what I value?" If not, this may provide you with the motivation to make some real changes in your spending behaviors.

Don't forget to include an expense category for savings. Plan to save money for unexpected expenses and long-term goals. If saving is not in your budget plan, it's not likely to happen.

Once you've built a budget, try it out. Then evaluate it and make changes as needed. A budget is not a fixed plan; it needs to be flexible so that you can make changes as you learn more about where your money really goes. For example, maybe the amount you originally estimated for food is too low. You may need to increase how much you expect to spend for this expense category and decrease another category to keep your budget balanced.

For more information about this topic, the website More for Your Money can help you design a budget step-by-step. If your income has decreased lately or you want to change your spending to meet saving goals, I recommend you read Setting Spending Priorities on the Getting Through Tough Financial Times website.

You may not want to keep a budget every day of your life. However during times of change or if you're worried about your finances, a budget is a useful tool to ensure your money is going towards the things that are important to you, including saving for long-term goals.

There's a lot of buzz lately about fees at financial institutions such as banks, and it may be time for you to take a close look at your checking account statement and see how much you're paying for your account.

Why the recent buzz?  Did you know that every time you use your debit card, merchants are charged an average of 44 cents?  You may not have been aware of this cost, but this was a fee that was likely passed along to you in the cost of goods and services you used. Does that sound high to you?  Well, it does too many people. And now, due to a new federal regulation, starting October 1^st the fee for using a debit card will be limited to about 21 to 24 cents per swipe.

People are busy speculating what this will mean for you, the consumer. Of course, there are costs to have a financial account and financial institutions are looking for ways to pay for these costs. Thus, instead of hidden costs like high debit card use fees, we are now seeing more fees.

These fees could end up being expensive for you – especially if you don't pay attention to what you're paying for. But, the good news is that they are fees you can see (not hidden) and you can make choices to avoid the fees. What can you do?

1) Decide which services that financial institutions offer are important to you.

• For example, do you like to do business in a building or would you rather conduct business online?
• Which tools do you use daily? For example, are you a heavy user of debit cards?  Or, do you use your ATM frequently for cash?
• Do you depend on receiving a paper statement or would an electronic one be fine?

2) Once you know which services you want, shop around to find a financial institution that offers the best deal that fits your needs. Don't pay for services you don't use and try to find a place with no or low fees for the services you do use.

3) Ask your financial institution if there are ways that you can avoid fees.

• For example, direct depositing your paycheck to your account may reduce fees.
• Or, maintaining a minimum monthly balance may keep costs down.

4) Check out different types of financial institutions. Different institutions in different locations will offer different services – don't assume they're all the same. Ask about no-frill, free accounts and see what each institution has to offer you.

Checking accounts (like many financial products) come in lots of different configurations. It's up to us to find one that has the services we want to use at a reasonable cost. Take a look at your financial statement and see if you have any fees that you hadn't noticed before.  Let me know what you find -- I'm curious to learn more about the new fees that may or may not pop-up in the next few months!

Most investors are well aware of the two general approaches used by mutual funds: active management and passive management, as seen in mutual funds that track an index. But I recently gained some insight about how these two fund strategies are only half the story, and I'd like to pass that along to you.

I attended a conference of the National Association of Personal Financial Advisers last month and heard a presentation by Richard Ferri, author of The Power of Passive Investing and other books. Ferri is a strong proponent of using passively managed index funds and ETFs. His presentation focused on the extensive history of research supporting his position.

But the "ah-ha" that I got from his presentation was his description of the four ways to manage an investment portfolio, looking at both the fund's investment strategy and how you (or your financial advisor) allocate your money to the funds you choose.

I've heard the terms "strategic asset allocation" and "tactical asset allocation" many, many times. But Ferri's explanation finally helped me get the distinction.


Strategic allocation is a passive approach: you decide what the asset allocation will be, and you rebalance periodically to maintain that allocation.

Tactical asset allocation is active: you are shifting from one asset class to another, or at least shifting the proportion of your portfolio allocated to an asset class.

Combine strategic allocation or tactical allocation with actively or passively managed mutual funds, and you get four ways to manage your money:

• Passively managed mutual funds, active allocation: You invest in index funds, but you move in or out of those funds and change your asset allocation based on economic news or your own instincts.
• Actively managed mutual funds, active allocation: You choose mutual funds based on performance or the reputation of the fund manager, and you make decisions to move in or out of those funds and change your asset allocation.
• Actively managed mutual funds, passive allocation: You choose mutual funds you hope will outperform the market, but you choose and maintain an asset allocation by periodic rebalancing.
• Passively managed mutual funds, passive allocation: You choose index funds, and you only shift assets to maintain your chosen asset allocation.

Where do you fit? Do you consider yourself a passive investor, but in reality you shift into and out of asset classes based on your personal assessment of the economy? Or perhaps you carefully choose among actively managed mutual funds, but once there, you maintain those investments except to rebalance.

Have a little heart-to-heart with your inner investor. You might be in for a surprise, and find out that you're not the investor you thought you were!