Why is it important to be attentive to your personal finances?
Say you're on a cross-country drive. The goal is to get from New York to Los Angeles. You pack up your trusty car, hop in and head west to begin your trip. What's wrong with this picture?
Ah, the map, perhaps a weather report and what about accommodations once you arrive? These elements will not only make your journey more enjoyable, they will also create a safer more clearly defined route. The choice is yours: You could wind your way through unknown streets and freeways, guessing which route is best and reacting to whatever life throws at you or with a little planning, you could relax and enjoy the ride.
Whether you are just starting your career with a brand new job or you have been managing your own finances for many years, one fact remains consistent.
Personal financial management is the map, meteorologist and travel agent in plotting your journey to maintaining and sustaining your own wealth.
The idea of managing finances can sometimes be daunting depending on your age, amount of accrued debt and thoughts and feelings surrounding money. But, it is never too late to begin!
The trip begins…
Even better than a cross-country drive; imagine a sun soaked beach in Oahu, Hawaii. In your mind's eye, you lounge on the powdery-white sand, sip a fruity drink and listen to the rolling surf. Then reality sets in. You're not there, in fact, you're not even close to Hawaii. A glance out the window at the snow-covered landscape shows you just how far away you are from the balmy breeze.
Believe it or not, you are a mere three steps away from enjoying your dream vacation--in the form of financial freedom. The three steps are: 1) Plan 2) Execute 3) Travel.
The first step--Plan--includes gathering data. Luckily, since the data is yours, you don't have to go very far. This includes tracking your spending, maintaining your checking and savings accounts, and assessing your true financial worth--or your assets. The invaluable knowledge can help you in understanding your cash flow, creating a budget to curb overspending and even in getting loans and investing.
With a little more effort, you can take the second step--Execute. Action is the key to managing debt. Incurring debt doesn't have to mean giving up everything in order to pay bills. If you are buried under a heap of bills and worried about how to pay these meddlesome debt piles you need not fret. There are some important and, yes, ingenious money management techniques to ensuring you'll be out of debt--or at least lessen the load--and happier before you know it.
By using the data gathered during your Planning stage, you can create a balance accounts, create a budget and either curb your spending or increase your income.
And finally, you get to relax with step three--Travel. You know how much you are worth, your bills are manageable and, low and behold, you are able to see the extra money--or perhaps the possibility of extra money. You can sit atop your data--or on the beach and plan ahead. This newfound knowledge can allow you to see the possibility of having your money work for you. Or, if you are big on investing in yourself--whether with school or a small business--you can take out loans and create a future with increased earning potential. Or, you can invest your money in stocks and bonds and even retirement accounts.
Okay, perhaps you're not going to travel. Maybe you don't even like to leave your hometown. The bottom line is this: By taking the burden of "have to," off of your financial view, you stand a better chance of actually accomplishing your goals. Managing assets creates new opportunities to make your money work for you. There are infinite possibilities when it comes to investing, managing and shifting funds. The most important element in doing so is to create consistent efforts over time.
Each of these steps can stand alone. However, they do link together in a way that allows you to understand your financial standing. Can you manage your debt without knowing your entire net worth or knowing you monthly expenses? Yes, you can. However, you stand a much better chance of conquering and subsequently staying out of debt if you assess your assets, manage your debt and look toward the future with investments.
