Some people are so intimidated by finances that they don’t ever get started. I understand that. I really do. And some elements of finance are complicated. But many of the most important and powerful elements of a solid financial life are easy to understand and simple to put in place.
Here are 5 of the most important financial tactics to take. The good news is they will take you 6 hours or less to implement. Let’s get started.
1. Stop Worrying About Your Debt
I didn’t say stop thinking about your debt. I just want you to stop worrying about it. Worrying won’t help you or anybody else. Instead, let’s talk about a couple steps you can take to erase that four letter word from your life once and for all.
Your first plan of action is to replace high cost debt with low cost debt. You do that by refinancing with lower-cost alternatives to credit cards and paying every dollar possible to the highest cost debt you still have. This is known as the “debt snow ball” and it works.
Your Mission Today
a. Make a list of your debts from highest rate to lowest rate.
b. List potential refinance partners.
c. Call 3 and make your pitch.
TOTAL TIME INVESTED – 45 minutes.
2. End Overspending
Sometimes it’s unavoidable to spend more than comes in. But be honest with yourself. Do you only come up short once in a while or is this a chronic problem? Regardless, you will empower yourself by knowing what you spend each month and then figuring out what the average looks like. This is important because it tells you whether or not you are living within your means or not.
Some people track every single expense and that’s fine. But it’s not absolutely required. Your bank statement tells you everything you need to know because it summarizes your total withdrawals (spending) for the month. Some months will be greater than others of course and that’s why I want you to track these figures each month and average them out for the year.
1. Pull out or download the last 12 monthly checking account statements.
2. Create a spreadsheet. Put the month in column “A” and put the total withdrawals in column ”B”.
3. Calculate your average monthly spending.
TIME INVESTED – 1 hour
3. Protect Your Family
The biggest financial risk to your family is if you can’t bring home the bacon. That can happen if you become disabled or dead. A vast majority of the people who end up in either of these situations had no control or choice in the matter. You probably don’t either.
That being the case, make sure you have the right coverage for either of these two events.
1. Read up on these two topics. The links I posted above will give you a great start.
2. If you don’t have the right coverage, get quotes and begin the process of putting the right insurance in place now.
TIME INVESTED: 3 Hours.
Neal’s Note – My parents didn’t think life insurance was very important. They were young and healthy – until they weren’t. You can find out how that played out in our family by reading my story. Save that time and just take care of your life insurance needs.
4. Check Your Retirement Contributions
Don’t expect your HR person at work or your CPA to remind you to maximize your retirement plan contributions. They’ve got hundreds of people to worry about and it’s easy to forget about you. Sorry Pilgrim.
That’s a little sad maybe….but it doesn’t have to hinder you. Make a few calls to your tax person and HR rep. Find out if you have contributed every dollar possible. If not, get it done. Even if this puts a damper on your savings plans, it’s usually more beneficial to put money into a retirement plan than to invest it outside of the plan. The reason? Retirement plans offer tax deferred growth, immediate tax benefits and (sometimes) employer matching.
1. Call your tax planner and/or HR rep and find out if it’s possible to squirrel more money into your retirement plans.
2. If you do have that opportunity, make arrangements to have that money deposited into those accounts.
TIME INVESTED – 1 HOUR
5. Beneficiary Confirmation
While we’re on the topic of retirement plans, please ask the plan custodian to confirm who they have listed as your beneficiaries. Some people never name beneficiaries or forget to update their selections. This is a very bad tone friend. If you don’t attend to your beneficiaries they are going to get hosed. Of course the courts and lawyers will be very happy but I’m guessing that isn’t a big concern of yours.
Call the HR department and the custodians that hold your retirement accounts and just ask them who the beneficiaries are. If you need to make a change, get it done. They’ll walk you through the process.
TIME INVESTED-30 Minutes
There you have it. If you are willing to invest 6 hours or less over the next week or two, you can change your financial future big time. Are you in?
(The first person who gets all these done and leaves a comment to that effect gets a free copy of my eBook, “Money Academy For Couples”).
What are you waiting for?