Who said that managing your money is hard? If you break it down (like we are going to) the difficult work is found to be early on in the process. The rest is pretty easy and frankly can be pretty boring.
One thing you cannot do with financial planning is to start it and let it run on its own. Finances must be attended to like a garden. A little planting here, weeding there, and some harvesting as well are needed on a regular basis. It is a process from beginning to ending which will keep you busy all of your life.
Lay out your garden. Assess where you are financially. This involves having a budget and a balance sheet. The budget shows what you have coming in and going out. The balance sheet shows your assets and debts and shows if you have more dollars in real assets (like your house) than your debts on loans that you owe. Are you in the black or red (owe more than you own, or own more than you owe)?
What to plant. Set up goals as to what you want to achieve in short-term, medium and long-term plans for your money. A good short term goal might be to pay off all high-interest credit cards and loans in a certain amount of months (based on what you owe). Medium goals include things like funding a vacation, etc. Long-term goals are there for retirement and long range investing.
Planting the seeds. Once you have performed the above steps, you can begin to put your plan into action. Create your accounts that will be used to fund your goals. Set up automatic savings processes so that you do not have to manually move money to accounts.
Watering and weeding. Now comes the part in which you monitor your financial activities on a regular basis to make sure that everything is running smoothly and according to your plan. You might need to make changes based on circumstances and factors upon which you could not have foreseen. This is all part of the continuing process of making sure that your money helps you reach your original goals.
Sometimes goals change. Your money must change with it. If there is a devastating medical issue, your finances might have to be radically adjusted. But your preparations for the future should help in taking out some of the sting of a given situation in which you find yourself or your loved ones.
Reaping the harvest. Imagine yourself in retirement, living a lifestyle that you set out years earlier to help in reaching this point. Revel in the fact that you made it happen. Make sure that you have a will in order to leave anything behind to those you love. And make sure that they know how you arrived at that destination. There are few things more important that passing on a legacy of financial responsibility to your children and grandchildren.
Make all of this possible by making wise financial decisions right now. There is no better time to begin than today.
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