Whether you’re a long-term saver or just starting out, making sure your finances are in good shape should be a priority. But where do you begin?
1. Draw Out A Plan
In order for you to achieve your goals, you have to write down a clear plan. The plan should have clear steps and milestones, in order to successfully pay out debts and have enough money at the end of the month to set aside for your goal. In order to successfully implement a plan, you will have to prioritize your expenses and focus on the more important and near-term goals. When creating a financial plan, remember to make a budget, keep contributing to your long-term goals and also build an emergency fund, so you won’t find yourself in the position of taking out a loan later on.
2. Commit 20 minutes a week to reading about personal finance.
Don’t try to learn everything about personal finance all at once. Instead, break up your financial education into digestible chunks. Allocate 20 minutes a week and read about personal finance topics. Choose one topic a week and read about just that topic until you understand it, then move on to something else. We have included some great financial book to start with, check our previous blog post: Change The Way You Think About Money With These Books
3. Hire a Certified Financial Planner.
At the end of the day, everyone needs professional help from time to time. You know you need to hire a CFP if you:
Have little or no experience with financial planning.
Have no inclination to do it all on your own
Want an objective, unbiased opinion
Have a complex financial situation
Don’t have the time to do it all on your own.
If you’re still not sure, check out this video that offers five key questions to consider.
Regardless of where you are on your financial journey, dedication and commitment to continued financial education are key. True mastery of any subject comes from constant practice, training and sharpening your craft. Make sure you continue to devote the time and energy to your personal finances throughout your lifetime.
4. Recognize Needs vs. Wants—and Spend Mindfully
Unless you have an unlimited amount of money, it’s in your best interest to be mindful of the difference between “needs” and “wants,” so you can make better spending choices. Needs are things you have to have in order to survive: food, shelter, healthcare, transportation, a reasonable amount of clothing. Conversely, wants are things you would like to have but don’t require for survival.
It can be challenging to accurately label expenses as either needs or wants, and for many the line gets blurred between the two. When this happens, it can be easy to rationalize away an unnecessary or extravagant purchase by calling it a need. A car is a good example. You need a car to get to work and take the kids to school. You want the luxury edition SUV that costs twice as much as a more practical car. You could try and call the SUV a “need” because you do, in fact, need a car, but it’s still a want. Any difference in price between a more economical vehicle and the luxury SUV is money that you didn’t have to spend.
5. Secure emergency funds
You never know what might happen next. Dedicate some amount of your income to emergency funds. Ensure that you are able to fight with unexpected expenses.
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