If You Don’t Do This You Will Probably Not Gain Control of Your Personal Finances

Financial Assessment

Have you ever wondered how you can gain control of your finances?

Have you ever wondered whether or not you will ever find the time to manage your finances?

I have seen many individuals who make a good income and struggle with managing their finances.

It’s unfortunate when a few small changes can help them save time and get their finances under control.

I know you want to have control of your finances so you can have a financial peace of mind as quickly as possible.

And that’s why I am going to show you what you must do first to begin gaining control of your finances so you can have the financial peace of mind you desire.

In fact it’s the same place everyone who wants to achieve financial peace must begin.

This one simple thing is:

Understand where you currently stand financially

The fastest and easiest place to start helping you get your financials under control is to know where you currently stand financially.  To gain control of your finances you need to only look at your current financial situation. It will help you know what changes need to be made.

The best way to do this is to perform a financial assessment.  It’s the first step in your journey to simplify and to have an understanding of your current finances. Doing a financial assessment answers the questions you need to ask in order to simplify your finances.

To begin your financial assessment take a few minutes to think about what your current financial situation looks and then write it down. Your entire financial picture can be seen on your monthly statements. To help you have better picture of what your current finances looks like gather all of your bank statements, debt statements (credit cards, mortgage, student loans, or other debt),and investment accounts (retirement and non-retirement).

Also gathering the statement will show you how many accounts you have and what is paperless and what is not paperless.

Now that you have gathered your statements write down your thoughts on what your finances look like. Many times we believe our finances are better than or worse than we thought but the only way to determine this is to actually take a look at them instead of just guessing. I have assumed things were better than they were but once I took a look at the situation it was worse than I thought so the best way to do this is to look for yourself.

Additionally while you have all of your statements in front of you why not construction a personal financial to determine your current net worth. Is it positive or negative? There you go. You have seen just one of the 9 steps to simplify your finances so you can begin to have the financial peace of mind you desire.

So the secret is to know where you stand first.

I have created a cheat sheet and checklist to help you begin to simplify your finances within 30 days.

To gain access to the checklist and cheat sheet click below to get your hands on this which can help you get control of your finances within the next month.

Til next time, remember to take one step at a time to simplify.

How to Get Your Finances Beach Ready in 6 Easy Steps

 

Beach Ready Pinterest

The summer is almost here. It is likely you have looked at yourself in the mirror. You have probably said to yourself I have to get this body into shape and ready for the beach. Who doesn’t want to look good while they are walking on the beach or relaxing poolside.

So in order to get your body beach ready you have to put in some work to lose a few pound or firm up your body.

The same is true regarding your personal finances. When the summer is here we will only have six months remaining in the year.  While you are getting your body in beach shape why not work on getting your finances into shape as well.  To get your finances beach ready is similar to getting your body into beach shape.

Here are 6 easy steps to take now to firm up your finances so your body and finances are ready for the beach.

Identify what you want to improve

Just like you would look in the mirror to determine what area of your body you want to improve.  Do the exact same thing with your finances. Take a look at your finances and determine what area of your financial life you want to improve upon or look better.  Are you overweight because you are carrying to much debt or maybe you are a little skinny and need to build up your savings.  Which ever area needs improving the first to is to identify that area first.

Take your current measurements

Once you determine the area or areas you would like to improve you need to see where you currently stand.  For example, you want to lose 10 pounds how will you know you lost 10 pounds without measuring your current weight by standing on a scale.  These few measurements can help you determine where you stand currently.

Net Worth

Your financial net worth is simply your financial assets minus your financial liabilities. Knowing your net worth is an excellent way to measure your financial health. Calculating your net worth will help you track your financial progress from year to year or from month to month. When you calculate your net worth you want this number to be positive not negative.

Debt to Income

Debt to income measures the amount of income you earn versus the amount of debt you have outstanding. It’s another good indicator of your financial health.

You calculate it by totaling up all of your monthly debts then dividing it by your income. Using your net income is a more accurate calculation because it is the actual amount you take home which is available to service your debt.

Credit Score

Your credit score determines your credit worthiness which is based on your history of managing to payment of your bills in a timely manner.

Credit score can range from low 400s to mid 800s. Maintaining a good to high credit score has its financial benefits because you will usually receive better interest rate as well as financing terms when you are financing a purchase.

Saving Percentage

Having a healthy savings has significant benefits and is another indication of your financial health. Calculating your saving percentage is simply dividing your gross income by your savings amount. When calculating your total saving take into consideration the amount you saving for retirement, emergency fund and any other general savings.

By improving these numbers you will improve your finances.

What numbers do you want to achieve?

You have calculated your numbers to access where you currently stand.  Were the numbers better or worse than expected?  Improving just one of these numbers will help your finances.  Just like you want to lose 5 or 10 pounds, you want to improve your numbers so you can look financially better.  So set a goal to either increase your savings percentage, reduce your debt to income, increase your net worth or improve your credit score.

Get Financially Lean

One way to get your body to look great is to get lean.  You can apply this same concept to your personal finances.  By making your finances lean you will improve your financial situation.  Here are several ways you can make your finances lean:

Reduce the amount of debt you have outstanding

Reduce the number of credit cards you have open or carry in your wallet

Reduce the number investment accounts

Reduce the number of bank account you have open.  Try to use one bank if possible

Eliminate paper statements

All of these will help you improve your finances.

Reduce Calorie Intake

If you are looking to tone up or lose some weight you usually will reduce the amount of food you are eating as well as monitor what you are eating.  You can apply the same to your finances.  Consider reducing the amount of money you are spending as well as keep track of where you are spending money.  This will enable you to save more and see where you are spending your money to determine what can be eliminated.

Make Small Lifestyle Changes

Now you have make some changes to your finances don’t let all of your hard work go to waste. Why not make a few lifestyle changes to help you maintain this financial beach body all year long. So you ask what do I need change? Start with your financial habits. Identity your good financial habits and look to eliminate your bad financial habits. These small habits can have an impact on your financial life year round.

So now use these 6 simple steps to take action to get your finances in beach shape.  Start now so you are not looking back wondering where did my summer go.

Do it now.

It will not only help your finances to look good but will help you simplify your finances as well.

Til next time, take one step at a time to simplify.

Have You and Your Future Spouse Had the Money Talk Before Your Wedding Day?

Money Talk Before the Wedding

Have you and your future spouse had the money talk? I am not talking how you will pay for the wedding or honeymoon but discuss how you will you handle your finances as a married couple.

Since money is high on the list of topics that couples most often argue about as well as one of the issues that many times leads to divorce. It an important topic to discuss with your future spouse before your wedding day.

I know before your wedding day you are focused on making this day a perfect day. Remember your wedding day is only one day, but marriage is a life time commitment so you want to start on the right financial footing.

Prior to your wedding day you and your spouse should take some time to discuss how you will manage your finances. Doing this will avoid those arguments and its better to know upfront how things will be handled so you can make the appropriate changes as needed.

Here are 8 topics you and your future spouse must discuss before you say I do:

Discuss who will Manage the Finances

Being single you are probably managing your own finances. But once you are be married, you have a few decisions to make regarding your finances. Deciding who will manage the finances is an important one. You want to decide who will pay the monthly expenses or check that it was paid.

If neither is designated as who will do what you may assume the other has done it but neither of you have paid any of the expenses. This can result in late fees and overdraft charges. To avoid this decide who will be the designated CFO. Doing this before the wedding will lead to a good start of your financial marriage.

Discuss if you will have Joint or Separate Accounts

Prior to your wedding you probably have sole owner accounts. Once you are married you have to decide if you will keep separate accounts or open joint accounts. This can be a tough decision because you were accustom to keeping separate accounts prior to the wedding. I like to always simplify my finances.

Consolidating your finances as a couple as much as possible will help you simplify your finances. But this may not work for everyone. Discuss and decide what you and your spouse plan to consolidate to avoid future financial arguments.

If you decide not to consolidate decide how you will handle paying your bills. Who is responsible for what expenses Having your own money that you can spend however you want can lessen arguments about money. Come to an agreement so everyone is on the page and agree with the plan.

Discuss how Much Debt Each has Outstanding

Debt is a commonly brought into a marriage. It’s likely one of you will have either credit card debt, student loan debt, car loan debt or mortgage debt which will be brought into the marriage. Having a discussion about the amount of debt each of you will bring to the marriage is an important conversation to have with your future spouse.

You want to be honest with your future spouse about your debt situation before the wedding. Not being honest about your debt situation is not a good way to start your marriage. If there is significant debt outstanding decide together how you’ll move forward with eliminating this debt.

While you are discussing your debt here are some questions you want to ask each other:

How many credit cards do each of you have?
• Do you have student loans?
• What other debts are outstanding?
• What are the balances?
• Are the payments current?
• What is time frame to pay off outstanding debts?

Having this discussion requires complete openness so don’t hide debts from each other. You can’t hide money from each other.

Discuss your Financial Priorities and Goals

Before your wedding day take the time to discuss your short term as well as long-term financial goals. It’s important to listen to each other’s goals. That way you can work together to create a list of your most important goals both of you want to achieve.

Once you have discussed your goals you can then set your financial priorities as a couple. Setting financial priorities as a couple doesn’t necessarily mean that you both share the exact same goals, it just means that each person is aware of each others financial priorities.

As a couple each spouse can have individual goals and you can also set financial priorities as a couple.

Discuss your Budget

One way to help you achieve the financial priorities is to take the time to establish budget as a couple. It is important that young couples budget together and not just for the weekly groceries. To do this you must understand your monthly income and expenses as a couple. Once you understand how much the combined income is then you can accurately calculate a plan to save money or eliminate outstanding debts.

Using an online budgeting software or an online budgeting site can be a helpful tool to track your monthly income and your expenses.

Discuss Your Savings Plans

Saving is an important part of your financial future together. It maybe a little challenging if both of you have different saving styles as well as savings goals. Now is a good time to discuss your savings goal with each other so you can make better saving decisions as a couple.

You should discuss the following regarding your savings:

• What are your savings goals?
• How will you save each month?
• What are you saving for?

Establishing your savings plans now will make it easier for the two of you to work toward reaching the goals you want to achieve.

Discuss long term plans?

You are about to get married you are probably not thinking about what would happen if one of you passes away or became incapacitated.  But as a married couple its something you need to discuss.  It’s better to have a plan in place when something does happen.

You and your future spouse should consider drafting a will and purchasing life insurance.  In addition to having a will and life insurance in place, make sure each of you update your beneficiary designation on your accounts to reflect your future spouse. This will ensure that your assets are distributed to the appropriate person.

Discuss on Regular Basis

Having the conversation about the above mentions topics is important before your wedding. But having ongoing regular discussions about your finances is crucial to a financially happy marriage. So make sure the financial conservation continues even after the wedding vows.

Your wedding day is the celebration before building a future with the one you love. It’s important that you and your future spouse have the financial talk prior to your wedding day to make sure both of you are on the same page when it comes to your financial future.

What are some other financial discussions you wish you and your spouse had before your wedding day?

Til next week, take one step at a time in order to simplify your finances.

 

Simple Inspiration Interview featuring Barry Choi

Barry ChoiThis week’s Simple Inspiration Interview features Barry Choi from Money We Have.  Barry is a personal finance and budget expert.  He provides practical money saving tips to help you take that dream vacation.  He also works at a Toronto TV Newsroom where he provides personal finance and travel tips.  Barry bio

Let hear how Barry has simplified his finances

What event lead you to simplify your finances and your life?

I started take things really seriously after I found out that my advisor had put me in questionable mutual funds that had high MERs and DSCs. This is when I realized I need to simplify things by learning to take control of my own finances.

What area of your financial life needed the most simplification?

After becoming a do-it-yourself investor I got a bit carried away and started investing in a few things I knew nothing about. After recognizing this problem I simplified my portfolio by selling off assets that didn’t fit my investing profile.

Where did you begin to simplify your financial life?

Cutting expenses and just spending less was where I really began to simplify things. By saving more I was able to increase my overall savings rate.

What was your biggest challenge or roadblock when it came simplifying?

Selling assets at a loss was a big challenge at the start. I would try to wait for things to break even before selling. This of course didn’t always happen but more importantly I didn’t factor in opportunity costs.

What app or tool helped you the most when it came to simplifying?

Plain old excel was the biggest difference maker since I was able to manipulate the numbers when I created a budget.

How has simplifying changed your life?

As an index investor I spend next to no time looking at my portfolio which has given me more time to spend doing the things I enjoy like blogging.

Are there any areas of your finances that you still need to simplify?

I’m pretty comfortable with where my finances are right now, but I would definitely like to learn more about taxes. I don’t think there will ever be a way to simplify that though.

What advice or tips would you give to others who want to simplify their finances?

Read a book. Honestly there’s so many great resources out there and if you read just one book, you’d probably know more about personal finance than 80% of the population.

What book, blog, or podcast would you suggest to someone who is looking to simplify or improve their finances?

For Canadians, my two go to people for anything personal finance related are Preet Banerjee and Gail Vaz-Oxlade. Both of them make personal finance easy to understand and they strive to help people learn about their money. Of course you could also check out my blog at Moneywehave.com

Do you have an emergency fund established, if so how did you determine the amount needed to fund it?

Yes I have an emergency fund of roughly $11,000. I came up with this number because between my wife and I; we have 3 bank accounts and that’s the combined total we need to avoid monthly fees.

How long did it take you to simplify?

Not long at all, it’s really simple once you’ve made it a goal.

What’s your best savings tip?

I have 3 savings rules I live by. 1) Spend less than you make 2) Pay yourself first 3) If someone offers you free money, take it! (pension plans, government grants)

What are your current financial goals?

I’d like to increase my income a bit this year by picking up some more freelance work.

Any other thoughts you would like to share with others who are looking to simplify?

Don’t wait, start now. There’s absolutely no reason why you should delay getting your finances in order.

Thanks Barry.  I appreciate you taking your time to sharing your thoughts on how you have simplified your finances.  If you would like to read more about Barry and receive some of his traveling and personal finance advice visit his blog Money We Have or follow him on Twitter @barrychoi

To read previous interviews in the series click Simple Inspiration Interviews.

If you are interested in sharing how you have simplified your financial life, send me an email and I will follow up with you.  Enjoy the rest of your week. Til next time, take one step at a time to simplify.