Getting your finances in order can seem like a daunting task. Budgeting. Saving. Investing. Most people would rather go to the dentist than come up with a financial plan!
But, by peeling back the layers and taking a cold hard look at the numbers, you empower yourself to create a better financial future. Look, it’s never easy. But knowledge is power. And the more you know about where your money goes, the better chance you have of staying on track and meeting life’s most important milestones.
The first step is defining what you want out of life. Like most things, financial goals are subjective. What’s right for someone else may not be right for you. Take a deep breath and think about where you want to be in the next five, 10, or 20 years. Do you want to be debt-free? Comfortable in retirement? Maybe you want to save money for your first family vacation? Whatever the reason, goals are yours and yours alone.
The best approach is to write down the most important things to you and your family. And once you have a clear objective in mind, then you can work towards achieving it.
To make your goals a reality, you need to break down your entire financial life. Analyze how much money is coming in each month, and more importantly, how much money is going out. For example, how much do you pay in rent? What is your car insurance? What about your cell phone bill? Tally up all of your monthly expenses so you have all of the information you need.
Once you gather all of the numbers, think about what changes you need to achieve your goals. Maybe it’s eliminating the cable bill. Or maybe it’s going to the movies every two weeks instead of one. Whatever you decide, small changes will profoundly affect the long-term. Look, it’s not easy. And you won’t reach your goals overnight. But, if you keep racking up small wins, your finances will trend in the right direction.
This is often the biggest challenge.
Most people start with good intentions and try really hard to make smarter financial decisions. But, like a diet, they end up struggling to stay on track. To prevent lapses along the way, think about your goals as planting a flower. It doesn’t grow overnight. And no matter how much you water it, it takes time for the roots to develop and the petals to blossom. Your finances grow in the same way. You can’t rush the process or take shortcuts along the way. If you stay disciplined and focus on the big picture, results will eventually start to show.
The key? Don’t be so hard on yourself!
In life, you can’t plan for everything. Emergencies will pop up, cars will break down, and you’ll find yourself in situations where weeks of hard work go unrewarded. But, the key is to stay positive and never get discouraged. Regardless of the detours, you can always get back on track. You have to keep your head up!
The best way to stay positive is to reward yourself each time you step forward. For example, every time you deposit into your savings account, find some way to celebrate and reward good behavior. That way, you’ll build up positive energy to pull you through when times inevitably get tough.