Finances can be a pretty daunting, and a lot of times we ignore them because we just don’t want to face them. Well, here's some news… if you want to improve your financial health you need to pay attention to it and start having your money work for you. Below is a checklist that is meant to help you get on the right track and to help you simplify your finances, but is not meant to take the place of a professional financial advisor. Print it out and review it with your financial advisor and add/ remove any steps they recommend.
-Get out a piece of paper and write down what you want out of your money. You need to know what you want before you can create it. Don't be afraid to state what you really want. It has been said that Jim Carrey wrote himself a check for 20 million dollars and carried it around until he reached his goal.
-Design a roadmap to your retirement. Most people have no idea how much money they will need at retirement. Your age at retirement, income you will need, years to retirement and how much you already have put way are key components for mapping out a proper path. In addition, it is a good idea to analyze your risk tolerance to ensure your investment strategy matches your risk capacity.
-Make appointments with the specialists. Make appointments with financial planners, accountants, lawyers and anyone else you need to help you create a long-term financial plan. Find people who you can trust and provide you with workable solutions. Look for one advisor who is willing to act as a quarterback for the financial team you are assembling. Too often there is a lack of coordination between the tax, legal, banking, insurance, and investment elements of your plan. Ask questions of your advisors, don't just accept what is said at face value. This is your future and it is important to understand what is being said.
-Sign up for on-line banking. This is a lifesaver. You can pay your bills online, set up automatic payments, and download your account information into financial software such as Quicken or Microsoft Money. This will simplify your bill paying process and save you valuable time every month.
-Pay every monthly bill you can thorough automatic payment. Your mortgage, car payment, utility bills, phone bills, etc can all be paid through automatic payment. Take the time and set it up, you will simplify your bill paying process and never have to worry about late fees again.
-Start putting money away in your 401 k. Most employers offer a 401 K and have some sort of matching program. We are talking about free money here! Would you pass up a $100 bill in the street? What are you waiting for? With that being said, even without the employer match, this is the most efficient way to save money since it is done pre-tax. For most people when saving pre-tax, $20 out of every $100 saved is really coming from the money you would have normally sent to the U.S. government.
-Pay yourself first. Start saving money every month. Regardless of how much you can afford. Even if it is only $25, have it automatically deducted from your checking account into a mutual fund or money market account every month. Treat it like a bill. It adds up. You have worked hard for your money, and you deserve to keep some of it. The most successful people at retirement are the people that paid themselves first and paid their bills second.
-Create a Slush fund. Create a slush fund to use for fun and exciting treats and outings. Some tips to trick yourself into saving: 1) Every time you get change put it into a jar, people have been known to pay for vacations this way. 2) Every time you buy something and get change save your 1's or 5's and deposit it into your slush fund account at the end of every month.
-Pay off your debt. Yep, this is the big one. Step one- Stop using the cards. Step two- establish a set amount that you pay each month and pay it. It is a good idea to talk this over with your advisor, he or she may have some creative ideas to consolidate your debt and help you pay it off more quickly. An added bonus, your purchases will mean so much more to you if you pay cash.
-Review your goals and your progress monthly or quarterly. This is one of those things in life that if you don't pay attention, it can easily get away from you. Your long-term goals and progress towards them should be reviewed annually, preferably with an advisor. Your interim progress on setting aside money and paying off dept is best reviewed monthly and quarterly.
Hopefully this list will help you get on the right financial path and simplify some of tasks we don't enjoy. The trick to meeting not only your financial goals, but any goal is to: 1) Be clear about what you want, 2) Simplify everything that you can, 3) Create action, 4) Review your progress and 5) Count your blessings.