STEP 2 – ORGANIZE YOUR FINANCIAL LIFE
Your financial life probably started out pretty easy. You got your first job while in high school, a few bucks came in and you went to the mall and blew the money on some clothes or video games.
Over time, things got more complicated. You might now have a car payment, student loan, children to feed, electricity to keep on, leaks to fix, insurance to buy ……. I think you get the idea.
It’s now becoming harder and harder to keep your finances in order. You always hear people say that you need to keep an eye on them, but you just cannot get started.
First, I recommend that you look at your financial past. What has your spending been like over the last 60 days? Is there a certain category where you overspend?
By forcing yourself to focus on what you have done, you can identify the things that need to be controlled or cut in the future. You may not like what you find out, but I always tell my clients one thing: The past is the past. There is no reason to dwell on it. Just move on and focus on your goals.
To review your financial past, you utilize a personal income statement.
Next, I think it’s good to find out about your current financial picture. What are the exact balances on your credit card? How much cash do you have? What are your vehicles worth? Most people have no clue about these values. You need to find out what they are so you can determine your goals more properly.
You will utilize a net worth statement to focus on your current financial situation.
Lastly, you need to start focusing on your financial future. This will require you to create a spending plan (i.e. a budget) which you will do in Step 3. By having all of your income and expenses planned out on paper, you can make sure each dollar is going where you want.