It happens often. Many people don’t take their finances seriously.
They know they should, but they just keep putting it off … until something happens.
What’s your excuse … why don’t you take your finances seriously?
“I’ll cross that bridge when I get there”
“I make good money and have plenty to spend the way I want to … at least for right now”
“I live for the present – why worry about the future”
“I don’t have time”
“Nothing bad will happen to me … stuff happens to other people, not me”
Most of the time, people put off dealing with their finances because it’s overwhelming.
But it doesn’t have to be.
Here are four easy steps to begin taking your finances seriously.
1- List what you want to do with your money
Why? This list is your motivation to stay focused.
It’s your lifestyle goals – how you want to use your money.
Do you want to reduce debt? … build an emergency reserve? … buy a new car?
Maybe you want a bigger home? … or travel abroad? … or take a sabbatical?
2- Determine how much you can save for your lifestyle goals
For this step, you need to know how much income you have and how you spend your money.
Use your year-end statements to determine how you spend money.
Most people spend a large portion of their money on entertainment/travel, food, and personal care.
Look for ways to shift spending from those categories to savings.
You’ve now created your budget, or what I prefer calling a spending plan.
3- Use apps to help you stay on track with your spending
There are many apps available to create a budget.
Keep the categories simple (e.g., do you really need to know if you bought food at a fast food chain or coffee shop?)
If you don’t want to link your bank account to an app, manually input the information or use a spreadsheet.
If you don’t know how to create a spreadsheet, use pen and paper.
Quit making excuses and do it.
4- Set-up automatic deposits to your savings account
Check with your human resources department to see if they can deposit part of your paycheck into your savings account.
Another alternative is to check with your bank to see if you can have an automatic sweep from your checking account to your savings account.
By making this step automatic, you’ll commit to saving every time you’re paid.
If you still need help, contact me. Our Financial Plan will cover all the above and include strategies to help you achieve your lifestyle goals.
Once you have your Financial Plan, we’ll help you stay on track with our Guidance Plan.
Keep your list from #1 nearby to reference when you start struggling with spending money.
Why wait for the New Year to start taking your finances seriously? Start now.
(Update to original post from December 13, 2016)
ABOUT THE AUTHOR:
Niv Persaud, CFP®, CDFA®, RICP®, is a Managing Director at Transition Planning & Guidance, LLC. Life is more than money. It’s about living the lifestyle you want and can afford. For that reason, Niv consults with clients on money, life, and work. Her approach capitalizes on techniques she learned throughout her career, including as a management consultant, executive recruiter, and financial advisor. Her services include developing comprehensive financial plans, divorce financial reviews, and retirement plans. Niv actively gives back to her community through her volunteer efforts. She believes in living life to the fullest by cherishing friendships, enjoying the beauty of nature and laughing often — even at herself. Her favorite quote is by Erma Bombeck, “When I stand before God at the end of my life, I would hope that I would not have a single bit of talent left and could say ‘I used everything you gave me.’”