By William E. Summers V
Most spend more time planning their next vacation than retirement. How do you start?
Have you given much thought to your financial future? What about retirement or saving for your children’s college? These can be hard ideas to wrap your head around in the best of times. But in times like these, it may seem impossible. It’s important to take the first step to gain back that ground you may have lost.
Step 1: Expense Review
Before you can fix a problem you have to know how bad it really is, right? The same is true with sorting out your personal finances. So some simple record-keeping will help you start determining how much you are spending each week or month – and on what, exactly. Someone I know uses a ledger sheet for that purpose. Others find it easier with a spreadsheet. Use the tools you have to start. You can always graduate to a more elaborate approach after you gain confidence.
Step 2: Financial Goals
This may seem a little strange if you are struggling to make ends meet right now. If you start getting your personal finances in order, you will soon have some discretionary income, and you need to figure out what is important to spend it on when that time rolls around.
The old logic that says, “If you don’t know where you are going, almost any path will get you lost,” applies. There’s wisdom in those words, so heed them. What is most important to you – saving for retirement? Is it putting something aside to help your kids go to college? No matter what the purpose, you can never succeed if you don’t start.
Step 3: Action
Now that you know what your personal financial goals are, it is time to work on a plan to get there. You are going to need a personal financial budget. A budget can get you on the road to a better financial future fast. And it doesn’t have to be hard. Don’t be deceived into thinking the answer is just to make more money. You need to spend what you have even more wisely. Again, a ledger sheet will work, but spreadsheet software is better; include home budget templates that offer a great start.
Step 4: Include These Basics
1. Track what you spend and account for everything. It’s very empowering to know how you spend your money.
2. Budget based on what you are spending (with an eye toward what you want to spend). Allow some wiggle room – things happen.
3. Find a way to begin setting aside some money in a savings account. Even a few dollars a week can add up quickly.
4. Protect yourself with insurance to make sure what is most important to you is covered. You’ll need professional assistance with this part. Don’t be afraid to ask.
Step 5: The Relationship Review
You don’t have to do everything by yourself. Go see your friends at Central Bank and ask for a Relationship Review to help determine where you are and where you want to go. They can provide an objective view of what you’re doing and recommend specific steps to help you along the way. They also have access to professionals who can help with planning for retirement or college, protecting your most important assets and getting the most out of what you have already.
Don’t wait for a better time to start getting ready for your financial future. The future is now, and you’re running behind!
William E. Summers V is the senior vice president of Central Bank of Jefferson County. You can reach him at firstname.lastname@example.org.