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|I teach families how to be Properly Protected, Debt-Free and Financially Independent.|
The Secret to a Great Financial Game Plan -- Take Control
One of the biggest financial mistakes that people make is dependence. When a person is dependent on outside sources, those outside sources control them. Their jobs, the government, and financial burdens like debt are some of the factors that control people's lives. So, instead of feeling good about their finances, people often feel ill. The secret to a sound financial game plan is taking control of your financial situation -- control those things that you CAN control!
You CAN'T control......................................but you CAN control...
- Social Security...................................Cash for retirement
- Your employer....................................Alternate sources of income
- Taxes.................................................Ways to reduce your taxes
- Inflation...............................................Maximizing your investing potential
- Rising Costs........................................Saving More
- The risk of a single investment...........Diversity of your investment choices
- Rising Costs........................................How much debt you incur for items you purchase
The first question that people usually ask when it comes to taking control of on your finances is, "Where do I begin?" Most people have too much month left at the end of the money. They feel that they do not have enough money to pay the bills, let alone any "extra money' to do the things they want to do. Don't give up! If you are really serious about taking control of your finances and putting together a game plan to get yourself out of debt and financially independent, there are ways to do this with the money you already are making. Let's take a look at a few options.
Pay Yourself First
In short, paying yourself first means putting yourself and your family before any other demands on your money. Take a set amount each and every payday and put it into some investment program, no matter what other bills that you have that month. With a good rate of return, you will be amazed at how fast that your money will build and compound.
Adjust your priorities
If you are like most people (including me), you spend money on things you really don't need. Or, like many others you do not manage your money, you simply spend money as expenses come up. Developing a management mindset can take time, but it is essential is you are going to take control of your financial situation. One of the best ways to manage your spending habits is to create and stick to a budget. As a family exercise, create and keep a budget for a month to start. Don't make it so much trouble that you will not keep it up. Every time you spend money, jot it down. Use this example: The average cost of a soda is $.75. If you and your spouse get 2 sodas each day, 5 days a week, you are spending $3.00 per day. That is $15.00 per week. If you work 20 days per month, you are spending $60.00 per month on soda. .75 per soda x 4 sodas per day $3 x 20 work days per month $60 spent on soda per month Now, you can not control the cost of soda's at work, but you can control how much you spend on sodas for work. You have 3 options:
- You can buy less sodas at work, therefore cutting your costs.
- You could go to the grocery store and buy a 12-pack of soda and take soda to work each day
- You could cut out the soda habit all together and drink water -- a much healthier solution.
There are usual many other things in our daily lives that we can adjust to give us extra money. After you have done this exercise with your family for a month, sit down and prepare a more detailed budget with your family for the future. Remember to allow for things such as gifts and put a dollar amount to each item. The real purpose of a budge is to give YOU control over YOUR money. YOU are deciding WHAT will be spent and WHERE you best use YOUR money.
- 35% Housing - This includes mortgage, rent, utilities, taxes and home maintenance
- 20% Transportation - Including car payments, auto insurance, tags, maintenance, gas, and parking.
- 20% Other - This may include food, clothing, child care, entertainment, medical, tithing and charity.
- 15% Debt - Student loans, credit cards, personal loans, medical debt and tax debts would fall in this category.
- 10% Savings - Preparing for retirement throughout your working life is essential!
Adjust your lifestyle
Along with controlling your matter, you must also control your priorities. A tough rule of life that comes with setting priorities is the rule that "You can't have everything." The important part of budgeting is determining a separating "wants" from "needs" Every time you start to spend money ask yourself, "Do I need...," or "Do I simply want..." This will help you set the right priorities with your money.
Earn additional income
If your family income is very modest and you find it hard to invest $50.00 per month, then you may need to take a part time job on a short term basis until you can get things organized.
Re-align your assets
Another way to free up money to take control of your financial situation is to re-align what you already have. Here are 2 places that you may be able to "free up" money:
- Low interest savings accounts - you may be able to take money that you are saving a a low rate of return, and invest it in a plan that gains higher interested, this building the balance of that plan much faster.
- High cost life insurance - replace your outdated, more expensive cash value life policies with a term insurance policy and save potentially thousands of dollars over time.
Avoid the credit trap
Credit cards are great for the sake of convenience. Many times hotels, airlines and car rental agencies will not allow you to make a reservation with out them. We must all be careful to avoid the commons problems that this "plastic money" can and will bring. Credit cards usually charge a very high interest rate and if not manages properly, you will pay thousands of dollars in interest and never pay the balance off. Installment loans are another credit trap that many people fall into. BY the time you pay off the balance on the load for the item you purchased, it is often broken and unusable. The newness and "wow" of the item you purchased on installment is often worn off.
Set Goals and Have a Plan
The most important part of "Taking Control" of your financial situation is to have a plan. You can not reach a destination, if you do not know what that destination is. Setting goals gives you 2 things:
- An incentive to make the needed sacrifices in your daily life.
- A way to monitor your progress in hitting that goal and getting to that destination.
There are 6 steps to reaching your goals...
Many years ago a man names Napoleon Hill came up with a formula used by many successful people who became financially independent. This formula is still as solid today as it was in 1937 when Hill's book (Think and Grow Rich) was written.
- You must have a specific goal.
- You must have a specific time to achieve your goal.
- You must write your goal down.
- You must develop a plan to achieve your goal
- You must decide what price you are willing to pay to reach your goal.
- You must think about your goal every day.
If you have questions, or want more information, please go to http://www.howmoneyworkstoday.info and complete the form. Or you can call Scott Roberts at (904) 759-7812
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