It takes disciple, determination, and time. But the task is less daunting if each week you make a realistic and specific resolution to help you manage your money.
Week 1. Buy a fireproof file cabinet to organize your files. Store current financial documents (bills, credit card statements) in one drawer, and permanent, less-used documents (birth certificates, house deeds) in another.
Week 2. Identify one area in your home where you will store and manage all of your finances. Your headquarters can be a desk, a table in your bedroom, a kitchen drawer. Keep all bills in an envelope or small box.
Week 3. Consolidate your financial accounts. Unless you have a valid reason for having several accounts, don’t.
Week 4. Review your income and expenses. Find out exactly how much money it costs you to live as you do. Evaluate your outflow in light of your total income. Identify your spending patters so you can plan.
Week 5. Streamline your bill-paying method. Collect them in one envelope or box at your financial headquarters, then pay them all at once. Better yet, see if your bank has a service to pay your regular bills automatically from your account.
Week 6. Examine your credit usage. Warning signs include a regularly overdrawn checking account, minimum payment (or less) on your credit card balances, and borrowing money to pay expected bills. Cut up all your debt-causing credit cards and cancel them in writing. Determine how long it will take you to pay off your debts, and do so over the next months. Inform creditors of your debt diet and how you will be paying off your bills on a regular schedule. If they still hound you (or if your debts seems insurmountable) consider contacting the Consumer Credit Counseling Service (1-800/388-2227).
Week 7. Decrease the number of credit cards you use. Too many credit cards can work against you in trying to secure a loan; creditors may worry that you lack the means to repay potential purchases. Keep two credit cards: one for business, one for personal use.
Week 8. Determine your net worth. Total your assets (market value of your home, investments, retirement plans). Then subtract your liabilities (mortgage, loans, credit cards balance). Now map out future plans.
Week 9. Set financial goals. Be specific with timetables and monetary amounts you want to reach. Then divide your dreams into short-and long-term goals (for example, you may want to save 10% of your gross income so you’ll have 125,000 education fund by the time your 3-year-old starts college).
Week 10. Determine your tolerance for risk so you can decide how much investment fluctuation you will accept. Risk tolerance is best determined when you’re losing, not making, money on investments. If you are nervous when your $10-per-share mutual fund drops a penny a day, you have a low tolerance and should invest conservatively.
Week 11. Teach yourself about financial developments to make better decisions. Begin with your local paper’s business pages, money magazines, or a beginners’ financial book.
Week 12. Begin to invest. Keep up with the companies you invested in and with developments in their fields. the better informed you are, the better your investments.
From – On Your Own: A Widow’s Guide to Emotional & Financial well-being, by Alexandra Armstrong, Dearborn Financial Publishing.
Christian Information Service.
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