5 Steps To Get Your Financial House In Order
Life can get messy, but your finances don’t have to follow suit. Regardless of if you’ve recently experienced a major life event or you’ve just gotten behind on tasks, you’ve come to the right place. Here are 5 proven steps you can take right now to take control of your financial life.
Step 1: Organize It
Where do you start when you can’t even find your login information or remember what accounts you have? The first step in evaluating your current financial situation is to get organized.
Use a Password Management System
Do you have a system for keeping track of your countless usernames and passwords? You’ll save yourself some headaches if you can find a method to keep all your information in one place. There are plenty of online password managers to choose from that will protect your information and make it easy for you to stay on top of your accounts and policies. These will save you a lot of grief if you are someone who keeps a “notebook” but doesn’t want to travel with it.
Go Green
If you want to minimize the amount of paper that piles up on your counters, save a tree and get rid of clutter by enrolling in paperless document delivery for all your bills and financial services. It is also more secure as mailboxes that are not the locking kind can fall victim to thieves. Since you’re planning to create a password management strategy, the only thing you’ll need to do to access account details is find your login information and be on your way.
Check Your Credit
When was the last time you checked your credit? For most Americans, it may be hard to remember. You’re legally entitled to a free copy of your credit report every year from each credit bureau. You can request your free copy at https://www.annualcreditreport.com/index.action. We recommend to do this on your birthday (or thereabouts), so you know you have done it each year. Don’t forget your children’s credit, or lack thereof. Unused credit cards and Social Security numbers are sometimes what cyber criminals look for. There are also a plethora of credit monitoring services available if you are concerned about identity theft.
Communicate With Family
Develop a master directory that lays out all your financial information to help you manage your affairs and serve as a guide to your family members if they ever need to assist with your finances. Be sure to include account numbers and logins and keep this document password-protected or under lock and key.
Step 2: Create a Budget (Ugh, did we really say that?)
A strong budget lays the groundwork for financial stability. As much as you may hate tracking expenses, knowing your inflows and outflows is the first step in reaching your financial goals. Knowing what you own, owe, and spend monthly is very helpful when making decisions about money. A budget helps you have confidence when making purchases rather than questioning, “Can I afford this?”
Add up all your income and subtract your monthly expenses. If you come up with a negative number, you are financing a lifestyle. And that never ends well. Look for ways to cut back, and track those areas that can get away from you, like big-box shopping, eating out, or entertainment. If you spend way too much money on discretionary items like clothing, for example, give yourself a monthly allowance and stick to it.
No one wants to have a budget—where’s the fun in that? But if you want to accomplish financial goals, your budget/spending plan is the key ingredient for success.
Step 3: Build an Emergency Fund and Tackle Debt
Emergency funds aren’t one-size-fits-all, and it’s best to come up with a number based on your income stability and family. A good rule of thumb is to have three to six months of expenses on hand.
Debt keeps you living paycheck to paycheck, which destroys your quality of life. There are several debt payoff methods out there, but two popular ones are the debt snowball and the debt avalanche. The best solution to tackling debt is often simple approaches which produce liberating results.
Step 4: Protect Your Assets
You’ll begin to accumulate sizable wealth as you pay off debt and save. In the event something happens to you, ensure your family is taken care of well by protecting your assets and planning what will happen to them after you’re gone. A few ways you can protect your assets:
Create or update your will along with other estate documents.
Update beneficiaries on retirement accounts and insurance.
Analyze insurance coverage: Do you need additional liability coverage for asset protection? Do you need life insurance to cover your goals/income?
Do you need more complex asset protection strategies?
Step 5: Don’t Do it Alone
Getting your finances in order can be an overwhelming process, but the choices you make today will impact where you end up tomorrow. Thankfully, you don’t have to walk the path to financial independence alone. No matter where you are in the process, our team at SC Financial Services, Inc. can help you integrate and organize all aspects of your financial life and realize your lifestyle vision through practical financial strategies. To learn more about how we can help you reach your financial goals, contact me today at 480-214-9596 or info@scfinancialservices.com.
