Financial Fitness

It seems like a simple idea, but the first rule of personal finance is to pay attention. It’s amazing how many of us have a financial plan that could be described as “Watch it come, watch it go” with very little purpose or intention behind it.

Are you taking charge of your finances, or do you feel like you’re just hanging on for the ride?

Some folks are so overwhelmed by the thought of financial planning that they don’t know where to start. So they don’t start. They just avoid the issue in the hope that it will somehow disappear.

But the only thing that will disappear if you avoid financial planning is your money!

If you’re overwhelmed by the thought of planning your finances, try taking these 3 steps first:

1. Write down all your account numbers, institutions, online access credentials, balances and interest rates in a central location. This will show you your bottom line in an easy-to-read format.

2. Write out your monthly income and fixed expenses. If your income varies, write out the average for the last 6 months. Don’t forget regular expenses that don’t occur every month!

3. Write a spending plan for the difference between your income and expenses. For the amount you’ve dedicated to savings, set up an automatic transfer to your savings on the day you get paid. In all the discretionary categories (groceries, entertainment, etc.) take out the amount you’ve budgeted in cash and put it in a labeled envelope so you don’t overspend!

Voila! Now you know your bottom line and you have a plan. You are officially on your way to taking control of your money.

The next step is to set goals (do this with your spouse if you’re married!) and make a plan to achieve them. Emergency fund? College fund? Retirement? Cruise? Make a plan and you can get there.