A recipe for security

(BPT) - Have you ever tried making a new dish without the benefit of having the recipe? Knowing the ingredients in their right proportions makes creating a delicious, satisfying meal so much easier. Without the ingredient list and directions, preparing a new food can be hit or miss.

Life can be like that, too. Having a recipe for objectives like losing weight or improving your finances can make those goals easier to achieve.

When it comes to your financial well-being, you need multiple ingredients to make the feast possible. Leave out even one element - like identity theft protection - and the whole effort can end in disaster. If improving your money management skills is on your to-do list this summer, try this helpful recipe for financial success:

Ingredients:

1 budget, carefully calculated and strictly followed
1 credit report, reviewed regularly
1 emergency fund
1 retirement savings account (or more, depending on your taste)
Debt reduction steps, as needed
1 batch of identity theft protection measures

Directions:

1. Prepare a budget. Gather a month's worth of paystubs (so you have an exact figure of your disposable income) and all the bills you must pay every month. Don't forget to include bills that are paid less frequently, such as car or renter's insurance. And, be sure to include a deposit to your savings account in the "must-pay" stack of bills. You can find budget worksheets online through sites like www.nfcc.org.

2. Review your credit report and learn your credit score. Check your report for errors, and to better understand what credit management practices are working for you, and where you may be able to improve.

3. Create an emergency fund. Whether it's a significant car repair, dental work not covered by your insurance, or the need for last-minute travel to care for a sick parent or child, emergency expenses happen. Traditional advice was to set aside enough cash to cover three to six months worth of expenses, but given the economy and continued high unemployment, it may make sense for you to set aside enough for six to nine months.

4. Create and contribute to a retirement fund. Take advantage of employer-sponsored options like a 401(k). Depending on your income level and tax bracket, you can research other opportunities like an individual retirement account (IRA) or a Roth IRA. Remember, don't rely on Social Security alone to support you through retirement. The website MyMoney.gov offers advice on saving for retirement.

5. Take steps to reduce debt. Pay down high-interest debts, like credit cards, first. High debt not only hinders your ability to meet your financial commitments and set aside savings, it can adversely affect your credit score, too.

6. Take steps to protect your identity. The Bureau of Justice Statistics reports that about 8.6 million households had at least one person 12 or older who experienced identity theft in 2010, the most recent year for which figures were available. Protecting your personal identifying and financial information from misuse by criminals is a key ingredient in your recipe for financial success. Products like ProtectyMyID offer comprehensive identity theft detection, protection and resolution, and can help you catch and resolve instances of identity theft. Don't just rely on a product, however. Practice smart identity theft prevention tactics, including creating strong passwords for all your financial accounts and changing them frequently, shredding documents that contain identifying information before disposal, and using a credit card, rather than a debit card, for online shopping. You can find comprehensive identity theft prevention information at www.idtheftcenter.org, the website of the Identity Theft Resource Center.