Updated: Aug 6, 2019
Taking control of your finances and creating a plan for your financial freedom can be an overwhelming task. But it doesn’t all have to be done today, or tomorrow, or even this year. You must start somewhere though. So let's talk about 5 things you can do today to take command of your finances. Implementing these 5 things can cultivate the confidence you need to live your great life now while working towards financial freedom in the future.
So here they are:
1. Start budgeting (The B-Word)
Meeting financial goals invariably starts with cash flow. Cash flow is the fuel that drives your financial engine towards the future you desire. If you can’t generate excess cash flow, you won’t be going very far. But, a budget allows you to prioritize your spending so you can find the dollars to start gaining traction in your financial life.
2. Calculate your Net Worth
Your net worth describes where you are located, as of today, in your wealth journey. When you enter a destination into your Apple maps, it must know your location to give suitable directions. The same concept applies to your financial life. You may want to retire at age 50, take a month off to travel abroad every year, or pay for 100% of your children's education. These are all goals that can be planned for. But no matter the goal, knowing where you stand now allows you to map out the necessary actions to move you towards your financial destination.
3. Organize Your Financial Life
This might seem trivial until you go through a process like buying a home and the mortgage company requests every financial document you've been sent for the last five years. That might be an exaggeration, but it feels that way. To ease the pain in these situations and for overall simplification, I suggest creating a “Financial Life” folder on your computer and organizing it in a manner similar to this.
After you've done that, back your files up to a cloud-based storage system such as google drive.
4. Create a Plan to Pay Down Debt
List out all of your debts other than your mortgage. Arrange them from smallest to largest with the minimum payments written out beside them. Look back at your budget and find the excess cash flow to destroy your debt. Then, snowball your way to debt freedom.
5. Create Financial Life Goals
It is important to have an aim in life. Maybe you want to start a business, buy a home, or travel the world. Put pen to paper and decide what it is you want out of life. Money is just a tool. If you start to use it as the means instead of the end, you can create a great life now while also building wealth for your future.
Most folks will read this and say “Yea, all that sounds good. I’ll do that tomorrow”. And then tomorrow becomes next week. And next week becomes the next decade. Think about how fast your last five years have flown by. Do you expect the next five to be any slower? Take control of your finances today and start living life proactively instead of reactively.
Take responsibility for your financial freedom and let us be your accountability partner, Forward Focus Financial Planning is here to help.
Disclaimer: All written content on this site is for information purposes only. Opinions expressed herein are solely those of Forward Focus Financial Planning, LLC, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.