“The time to save is now. When a dog gets a bone, he doesn’t go out and make a down payment on a bigger bone. He buries the one he’s got.” -- Will Rogers, 1879-1935.

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On Sunday I like to prepare a large meal in order to have leftovers for later in the week. This planning takes a lot of the stress out of a busy schedule. I think of it as my emergency fund for meals.

To make this work I have to do a few things though: I check our plans for the upcoming week and see if we’re going out or if we’re having anyone over, consider what type of meals we’d like to have; fancy or casual, and make sure that I have the basic ingredients on hand.

If you are cooking or arranging for your financial well-being, the first step is to take a realistic look at what you have and what your needs are. Review current sources of income and compare with your expenses. You’ll probably find unaccounted for excess cash “on paper”. To determine where it really went, write down whenever you spend money or take out the credit card. This way you’ll be able to find the money that you are intending to save. Control your money with a written plan.

Look at last year’s checkbook register to see what your unpredictable monthly expenses are (entertainment, hobbies, travel). Categorize expenses (food, clothing, childcare, utilities, and transportation). Write down everything, even the diet coke or coffee you pick up when filling the car with gas. You’ll be surprised where the money goes! Prioritize financial goals and determine how much you’ll need to save each month. Differentiate between long-term and short-term goals. Bring your goals in line with your income (i.e. buy a used car, a less expensive car, or wait another year for a car). Putting off a purchase is “delayed gratification” and not necessarily a bad thing.

Make the written plan realistic. Over a few months, you can get your spending on track and make progress to balance your budget and set aside funds for your future.

By understanding your household cash flow and budget, it may be easier to grasp the Federal Government’s recent activity.

What does it mean when you hear that “Consumer Sentiment fell further in mid-February”? Relate it back to your own situation — if you were concerned with job security and the source of future income your confidence may drop too. So, what to do?

President George Bush signed the $152 billion fiscal stimulus bill and Treasury Secretary Henry Paulson indicated that efforts would be made to get rebate checks out as early as May in attempts to stimulate spending and the economy. Will this help “grow” and stimulate economic activity and your consumer sentiment and confidence?

Federal Reserve Board Chairman Ben Bernanke presented a sober economic outlook to the Senate Banking Committee, saying, “more-expensive and less-available credit seems likely to continue to be a source of restraint on economic growth.”

He also said, “the softer labor market, together with factors including higher energy prices, lower equity prices, and declining home values, seem likely to weigh on consumer spending in the near term.”

This could be associated with increasing interest rates — your cost of money; i.e. the interest rates on your mortgage, credit cards and the like.

The Fed Chairman is using monetary policy to influence our economy and behavior. The Federal Reserve Act states that, in conducting monetary policy, the Federal Reserve System and the Federal Open Market Committee should seek “to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.”

With monetary policy, the Federal Reserve can affect the volume of money and credit and their price — the cost of money being interest rates. This way, it influences employment, output, and the general level of prices. The Federal Open Market Committee (FOMC), the Fed’s monetary policy-making body, issues a statement following each of its eight annual meetings. The statements describe economic conditions, monetary policy, and the actions the FOMC took with respect to the federal funds rate and the discount rate — the rate the Fed charge depository institutions for overnight borrowing.

In contrast, fiscal policy is the government’s program with respect to (1) the purchase of goods and services and spending on transfer payments, and (2) the amount and type of taxes.

The tax rebate is part of the government’s fiscal policy that is designed to increase short-term economic growth.

Fiscal policy is similar to the way we as consumers change spending and savings habits. Monetary policy is more attune to the use of credit. We’re less apt to finance goods and services at higher interest rates if concerned about where the income will be coming from in the future. The reduction in interest rates may act as a stimulus to spending if your confidence (consumer sentiment) has increased. If that weren’t the case then the reduced rates probably wouldn’t change your behavior too much.

I hope this helps you to understand the importance of knowing where your money goes and the true cost of borrowed money.

Moral of the story is to make extra and freeze the leftovers rather than using the credit card to eat out every night! Call me thrifty and frugal anytime.

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Darcie Guerin is a financial adviser and branch manager at Raymond James & Associates Inc. at 606 Bald Eagle Drive, suite 401, Marco Island. Contact her at Darcie.Guerin@raymondjames.com, 389-1041 or toll-free (866) 343-0882.