| I have been asked by many people over the past | | | | them fairly easy if needed. |
| few years this question, "What do I need to do | | | | I recommend using a hanging file folder system. |
| first in order to get my personal finances | | | | All you need is a hanging file folder box/crate, |
| together?" | | | | about 15 hanging file folder, and about 100 manila |
| When people first started asking me this question, | | | | folders. |
| I have to be honest I wasn't sure what to tell | | | | The most important items that you will need to |
| them. | | | | track are: Taxes (7 years back), Retirement |
| Now that some time has passed though, I feel as | | | | Accounts, Social Security, Investment Accounts, |
| though the ANSWER to this question is quite | | | | Savings and Checking Accounts, Household |
| simple. | | | | accounts, Credit Card Debts, Other Liabilities |
| What I mean to say is that the ANSWER is | | | | (debts other than credit cards and mortgage), |
| simple, but what trips people up isn't the ANSWER | | | | Insurance. These 9 accounts are the most |
| but the | | | | important and will help you have a better |
| ACTION. | | | | understanding of your total financial picture. |
| So what I am going to do for you today is | | | | So your action step at this time is to create a |
| answer the question: "What do I need to do first | | | | filing system so that you can store, access and |
| in order to get my personal finances together?" | | | | understand your personal financial documents. |
| by supplying you with some basic ACTION steps | | | | Don't skip this step, it is the most important of |
| to get you started in the right direction. | | | | the five. |
| STEP 1 - Determine Your Values. | | | | STEP 4 - Determine Your Plan/Budget - |
| This step may seem a little out of place for | | | | Retirement, Savings, Investments, and Tithing |
| financial planning. Most people ask me, "What do | | | | Once you have a better picture of your current |
| my values have to do with my finances?" | | | | financial situation. It is time to be honest with |
| I say to them, "Stop for a minute and think about | | | | yourself and decide whether you think you are on |
| it, is there anything more important than your | | | | the right track or you need to overhaul your |
| values?" | | | | financial plan. |
| All your decisions are based on your own personal | | | | Most people at this point have decided that they |
| set of values. Where you live, what you drive, | | | | need a complete overhaul. Again, don't get |
| how much and where you spend your money, | | | | discouraged, because this isn't as hard as most |
| what you focus your time and energy on - are all | | | | people make it out to be. |
| affected by your values. | | | | Determining your Plan/Budget is really just decided |
| This is why once I understood Step 1; I could tell | | | | what your priorities are and where you money |
| people with one hundred percent certainty that | | | | needs to go! |
| once you have a clear picture of what you value | | | | The hard part about this is making sure you are |
| most in your life - you'll be better able to figure | | | | paying the most important people first. I make |
| out how to create your personal financial plan. | | | | my priorities Self, Bills, Cost of Living, Fun |
| At this point you need to take an action step: I | | | | Excitement. |
| want you to take about 30 minutes and write | | | | When I say Self - I mean "Paying myself first!" |
| down what your top 5 values are. Remember, | | | | Taking a percentage of my hard earned dollars |
| we are talking about values not goals. | | | | out of my paycheck and dividing in up between |
| Values are security, happiness and freedom. Goals | | | | saving, investing, and tithing. I pay myself first |
| are pay off mortgage, be debt free, etc... Once | | | | because I am the most important in my life. |
| you have figured out your top 5 goals you are | | | | When I say Bills - I mean fixed expenses that |
| well on your way to personal financial success. | | | | you pay month to month. Mortgage payment, |
| STEP 2 - Determine Your Goals. | | | | gas, water, power, etc.... Things that very rarely |
| Now that you know what you value in life, it is | | | | change month to month. |
| time to base your goals on these values. | | | | When I say Cost of Living - I mean variable |
| What I mean by that is if you chose, Security as | | | | expenses that fluctuate month to month. |
| one of your values, then one of your financial | | | | Groceries, dining out, vehicle gas, etc... Things that |
| goals could be to start putting aside 10 % of your | | | | change month to month. |
| income for an emergency account. | | | | When I say Fun/Excitement - I mean expenses |
| Another example would be if you chose | | | | for things that I want to buy like, golf clubs, cars, |
| Excitement as one of your value, then one of | | | | guns, etc. Stuff that you want. |
| your financial goals would be to start putting aside | | | | Over time you can create a budget yourself or |
| $50 a week aside to take your family on a | | | | tell a CPA exactly what you want and they can |
| monthly trip. | | | | develop a budgeting system that you can use to |
| Whatever you want to do that is in line with your | | | | keep track of what you spend and then you can |
| values needs to be considered. | | | | adjust it yearly as needed. |
| To get you started, I would take your five | | | | STEP 5 - Implement Your Plan |
| Values and chose 3-5 quantifiable, goals that you | | | | Now that you have taken the time to figure out |
| would like to accomplish for each value. | | | | what your values and goals are. You have |
| STEP 3 - Get Organized | | | | developed a system for tracking all of your |
| Now that you have a better understanding of | | | | financial information and created a budget based |
| yourself and what you want based on your | | | | on your values and goals, you have to take action |
| values you can begin to focus on your financial | | | | steps to achieving them. This will seem like the |
| situation. | | | | hardest part of the whole process but just |
| The reason, Step 3 - Get Organized is after | | | | remember that all things that are worth doing and |
| determine your values and goals is because, this is | | | | getting better at take time. |
| the hardest part of the whole process. | | | | Make a commitment to yourself to take small |
| Being that this is the hardest part of the process, | | | | actions daily to move closer to your ideal financial |
| you can now look back at your values and goals | | | | situation. This process may take up to 12 months. |
| and have some motivation to keep you on track. | | | | The question you need to ask yourself though is, |
| Getting organized sounds harder that it is, | | | | would you rather be in the same situation |
| especially when it comes to personal finances. | | | | financially in 12 months or would you like to be 5 |
| The best way to get a handle on your total | | | | steps ahead. |
| financial situation is create a system for filing and | | | | It's up to you to make that decision. I hope this |
| keeping all your personal financial documents so | | | | has been helpful and look forward to your |
| you know where they are and can reference | | | | comments. |
