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Saturday, February 21, 2009

Start Planning Your Finances

By Kay Riter

Do you deal with your finances? Does someone else do them for you? Do you just ignore them and figure you're doing just fine? How organized are you with your money? If you don't deal with your money, do you ever worry that there is some kind of problem?

If it sounds like I'm implying that you are bad with your money, you hit it right on the head. Anyone that is disorganized financially, has no control over the finances. Having no control can mean very bad things down the road.

No matter who you are, how old you are, if you're married or single, or if you make a lot of money or not much at all, you need to plan your finances. Planning when you have little money will help you make it through tough times and planning when you have a lot of money will keep you from wasting it and wondering where it went.

Don't think that financial planning is just to hard to bother with, because it's not. It's really not hard at all. IF you don't think you could handle it, you could hire a financial adviser. To start planning, you need to take a look at where you are in your life.

First, add up all your assets. Add together the value of your home, investments, and checking and savings accounts. Subtract out all your debts and you get your total net worth. This is how much money you have.

Next, make your goals. Do you want to pay off your debt by next year? Make it a goal. Do you want to retire at age 55 with $2,000,000? Make it a goal.

Don't think any goal is impossible. If it looks too big, start with smaller goals or break up the larger goals into smaller short term goals. For example, you may think could never save a $12,000 emergency fund in 2 years on a $35,000 salary, but if you make a good enough plan, it can happen!

Once you have your goals, you need to come up with a plan. Figure out how much you need to put aside each month. Then make a budget to help you save each month. Make sure you follow your plans. They will mean nothing and do nothing for you if you give up sooner or later.

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