How do I know today is Take Control of Your Finances Day? Because I just declared it so!
Presumably, you’ve already filed your taxes, since April 15th has come and gone. Hopefully, you’re all set in that department. But maybe you lost track of some of the forms. Or didn’t realize how huge a tax bill you were going to be paying. Either way, money (or lack thereof) is fresh in your mind.
That’s why I’ve decided that the Saturday (and Sunday…okay, the weekend) after Tax Day will be Take Control of Your Finances Day. This is like a New Years Resolution, but way better. You don’t have to pledge to lose 15 pounds or keep the refrigerator clean. You simply have to pledge to stop and take a look at your financial standing, and to do everything in your power to improve it. And don’t just SAY you’re going to do it…DO IT!
How can you start?
Track down all of your accounts, assets, debts. You need to know where all your money is, and where you owe money to. Make sure you know all your usernames and passwords for the credit cards, checking accounts, savings accounts, retirement accounts, investment accounts, student/auto/home loans, etc. that you can access online. You should know what the balance is and how much you owe on every account you have. It’s important to have all this information easily available. If you want to keep better track of everything, you can import all your account information into sites like Mint and Thrive, [edit: Thrive is no longer available] to name a few. Using these sites, or a spreadsheet, or a site like NetworthIQ, you can see what your net worth is, by adding up your assets and subtracting your debts. You can use your net worth as an indicator for tracking your progress. Hopefully, each month/quarter/year, your net worth will grow!
Educate yourself. Whether you like blogs, books, or seminars, you need to start learning. Start from the beginning, if you have to. There are plenty of resources out there. For blogs, you can start looking at some on my blogroll (see the right hand side). There are lots of books you can check out. There’s I Will Teach You To Be Rich, books by Suze Orman, and many books that speak more in parable form, like The Wealthy Barber and The Richest Man in Babylon. Find them at your local library! Many employers (especially larger companies) offer free personal finance, investment, or retirement seminars. Take advantage of them! Learning is a life-long process, so don’t expect to know everything right off the bat. But starting your path down educating yourself is very important for empowering yourself and making sure you make the right decisions.
Start an Emergency Fund. It’s important to have some money stashed away in case of emergencies. It’s a lot better to use money you already have to pay for something than be forced to borrow (either through a loan or on a credit card). You can start this fund with a small amount of money, and build it up over time. I’ve found that setting up automatic transfers from my checking account (or direct deposit from work) into a savings account makes this process pretty painless. You don’t even notice it’s missing! I opened up a savings account through ING Direct. (Fun bonus with that was I got $25 extra dollars because I opened up the account through a referral. If you’re looking for a referral link (where you’ll get $25 free, and I’ll get $10 free, fyi), shoot me an email at firstname.lastname@example.org.)
Track your spending. Using the websites I mentioned before (Mint, Thrive), or spreadsheets, or a site like walletproof [edit: walletproof is also no longer available], you can track how much you’re spending. You may be surprised just how much money you’re spending on day to day expenses. You will end up being more conscious of where your money is going, and you can try to cut down on those expenses.
Make a plan to pay off your debt. Whether you do it all at once, or whittle it away little by little, you need to make a conscious decision to eliminate your debt. And at the same time, you have to agree that you aren’t going to go into any more debt in the process.
These are just a few of the top things you should think about. I encourage you to ask questions or alert me to topics that are missing. I can add more links/advice that I may have forgotten. I just wanted to get everyone to start thinking about what they can do today!
What are you doing to take control of your finances today? Start now!