Too many of us are in survival mode as it relates to our
finances. I hear so many people describing their desire to simply hold on to
what they have or to “make ends meet.” That is exactly how I used to live. In
fact I was even worse. I was paying last months bills with next week’s check
and dodging bill collectors. One day I decided that I was not going to live
that way for the rest of my life. I learned that I had to set some financial
goals in order to develop a financial strategy.
Most of us will need help in establishing our financial goals.
We all have dreams and there are financial implications attached to our dreams.
But a goal is much more concrete than a dream. A goal is something that a
reasonable plan can be executed to achieve. I can dream of buying a castle but
when I have that as a goal, I better be able to explain to myself how I am
going to do that. It helps to have a certified financial planner help us in
developing our financial goals. But even before we solicit the help of
professionals, there are some things we can do for ourselves.
In my book dfree: Breaking Free from Financial Slavery I outline four steps to financial freedom. The first step is
to Get Started. That means that it is important to stop dreaming and start
planning; to stop talking and start taking action on our financial status. To
begin there are two important tasks to undertake. First, keep a record of all
of the money you spend in a 30 day period. At the end of those 30 days take a
look at the list of expenditures and circle the ones that are not absolutely
necessary for your survival. All of the items that will be circled represent
money that can be used to help you reach your financial goals. Next obtain a
copy of your credit report. Free copies of our credit reports can be obtained
once a year from Annual Credit Report.
There are three main credit reporting agencies that contribute to your credit
score. A free copy can be obtained at this website and your inquiry does not
impact your credit score. I actually get my report from each of the three once
a year but I get a report every four months from each of them. By staggering my
requests I am able to keep up with what’s happening with my credit more
frequently at no cost. Our credit reports not only reveal our credit history but
they also reveal information about our credit and our identity in general. Identity
theft is a growing problem and our credit reports often inform us about
unauthorized attempts to use our personal information
Financial goals describe where we would like to be
financially by a certain time. Obviously, the shorter the time, the smaller the
goals. But financial goals are more than numbers. They also reflect our values.
The purpose of money is that it be used for a purpose. Some purposes have more
value than others. After we make sure our basic needs are covered, the way we
use our money and the purposes for which we accumulate money reflect the kind
of people we are and the kind of legacy we will leave. My grandmother was born
in 1901 and when she died in 1981, she owned multiple homes that were all debt
free. She left an inheritance for her children and her grandchildren. My goal
is to do at least as well as she did.
Setting financial goals is so important that I just released
a new workbook that is a companion to my dfree® book. dfree® Lifestyle: 12 Steps to Financial Freedom. This workbook provides a step by step process that will help you create a spending plan, identify your spending leaks and create a timetable for getting out of debt.
It does not matter how much money you currently earn. You can begin the process of building your financial future by properly managing your financial present.
To be continued tomorrow.
Action: Estimate how much you spend in an average week and begin to compare your reality to your estimate.
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