Date Created: Jun 01, 2005, 03:52 PM
The key to keeping your finances in tip-top-order isn't too hard to grasp... organize Organize ORGANIZE!
It's always a good idea to keep your financial statements, papers, and documentation organized in a filing cabinet...but many people forget another organization step that will lead to both financial freedom and wealth; the financial plan. Writing down in some format what your financial goals and milestones for the next months, year, or 5 years can not only help you achieve your goals, but also allows you to visualize any mistakes or openings for monetary growth you may have.
A personal financial plan need not be something elaborate. It can be anything from a simple list of bills you want to pay off on a calendar for the month, a list of credit cards you want to pay off in your "push plan" (explained in my last article on Escaping Credit Card Debt), a list of investment accounts you plan on contributing to during the year, or all of the above.
I personally have a few lists I keep track of for my finances. The most commonly used in my financial arsenal is the ongoing list of bill payments I'm diverting my bi-weekly paycheck towards. This helps me determine and balance when each bill is due and when I get paid...thus allowing me to never miss a payment and effectively reduce my debt raising my FICO score.
Here's a sample mini-list of my current financial plans for the next year:
1. Reduce 98% of my credit card debt.
2. Build savings account to over $2000 allowing me to convert it to a Money Market account.
3. Open a brokerage account Roth IRA.
4. Open a brokerage account Taxable Investments for trades.
5. Build a long term emergency fund into a 2 year Certificate of Deposit.
6. Apply savings towards a downpayment account for our first home (whether we build on a plot of bare land or buy an existing house depends on our downpayment savings -- currently planning on 3-5 years of growth before we buy our home).
All that in addition to my regular bill paying and 401k contributions to the max match will help me save up for my family's future wealth.
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