It’s been said that, “A goal without a plan is just a wish”. This applies to personal finance, as well as many other aspects of life. Most people wish that they could stop worrying about their finances so much, but they have no plan to achieve that goal. When it comes to finances, not having a plan really equates to not knowing yourself. It might surprise you to hear this, but a quick self-evaluation can help anybody formulate a basic plan on their own.
As many of us know, if you don’t have a game plan, it’s easy to be surprised. Most people don’t enjoy surprises, especially financial surprises. Financial surprises tend to create stress. I recently saw a statistic from a Legg Mason survey that shows the average person spends an hour and twenty minutes a day thinking or worrying about money. That sounds like a lot of unnecessary stress to me. Last week, The Wall Street Journal shared some financial stress related numbers as well:
Financial stress isn’t just limited to the average person either, according to the National Bureau of Economic Research one in six NFL players goes bankrupt within 12 years of retirement. What’s the message here:
Without a financial purpose or direction, we’re ALL capable of becoming “lost”.
Self-evaluating to create a financial game plan for yourself will not magically solve all of your problems. What it will do is paint a more accurate picture for you, which will either make you feel more comfortable or show you what changes you need to make. Both outcomes are a step in the right direction.
How to get to know yourself (financially)
Start by answering these basic questions:
– How much do you make (after taxes)?
– How much does your lifestyle cost you monthly? We’re talking essentials, not discretionary spending because this can be budgeted (if necessary!)
– What are your goals? Both short and long term. (Eliminating debt, saving for a down payment, investing for retirement, etc.)
– Rank your goals by their level of importance to you – This will dictate how you allocate money left over after paying essential monthly expenses.
– Create your plan and stick with it – You may come off course at times, but focus on keeping the trend heading in the right direction.
Get to know yourself financially. If you’re doing well, you can get that peace of mind. If you aren’t doing so well, there’s plenty of time to change and you’ll be equipped with the knowledge you need to achieve success. One thing’s for certain: if you don’t evaluate where you’re at, you’ll never know if your situation changes or not.
...And We Deliver!
Get our updates delivered right to your inbox.
Sign up and get a copy of our report: The Eight Big Mistakes Many Investors Make.