 A Focused Financial Plan For Wealth
Your Step-by-Step
Personal Finance Plan
 1. What Does Money Mean to You?
What is your money personality? Are you the Worrier, the Avoider, the Hoarder, or the Spender? What need does money fill in your life? You can change and adapt your money personality so that you are able to build wealth and live in security. First, acknowledge your money style and what money means to you. Then consciously try to enlarge your outlook by creating a budget, financial goals and self-motivation.
2. Live Within Your Means Whatever your income is, do not spend more than you bring home every week. You know people who drive a car they cannot afford, and wear clothes they cannot afford, to boost their ego or to appear more successful. Many frugal people can grow wealthy by living beneath their means, and add to their savings every week. Do not finance your lifestyle with debt.
3. Let Your Partner On the Team Discuss your money matters with your partner. Get yourselves on the same page for financial planning and make decisions as equals. A budget is more likely to be a success when both parties talk it out and arrange it together. When you work as a team, neither person wants to sabotage the budget and undermine their joint decisions.
4. Plan purchases Discuss purchases, both personal and household, in advance. Don’t make major purchases on impulse. Put the decision to buy on the back burner for a few days, until you see the practical need for the item.
5. Avoid Credit Cards Avoid the lure of credit cards. If you don’t pay off the credit card balance every month, the issuing bank charges you interest. If the bank doesn’t receive your monthly payment on time, you will also be charged a late fee of $30 to $60. If you are late with a few payments, the bank will raise the interest rate you pay, to 20% to 35% of the unpaid balance. For most of us, the plastic credit just feeds the temptation to buy more than we can pay for.
6. Buy A Used Car A used car is generally a better value than a new car. When you buy a late-model used car, the previous owner has absorbed the steepest portion of the car’s depreciation cycle. In its first three years, the new car depreciates by as much as 38% to 73% of its purchase price. Do you want to throw away that kind of money? For a used car, license fees and auto insurance premiums are much lower, and the late model used car may still be under its original warranty. Best of all, if you buy a lower priced used car, you may be able to pay cash up front for it and thus avoid the high finance charges of borrowed money.
7. Do You Need Life Insurance? 6.If you are single, or if you and your partner are both working and you do not have young children, you do not need life insurance, no matter what the insurance agent tells you. However, to provide for the partner and children in the event of the death of the primary earner, you need life insurance.
Life insurance is a poor tool for investment or cash savings. But “term life insurance,” which does not pay except in the event of death, has lower premiums and will provide security for your family. As you grow older, the premiums on term insurance increase. Ten years from now, if you are not in good health, you may not be able to renew your term insurance. Therefore, you should choose a term insurance policy that allows you the option to convert to “permanent insurance” when it expires.
8. Find a Second Income Source Job security is not a given in the new economy. To protect yourself against unemployment, create a second source of income for yourself. You may find this income opportunity by moonlighting at a second job, setting up a home-based business, selling at swap meets, consulting, selling at Internet auctions, servicing autos or owning rental property. Keep your eyes and ears open for self-employment opportunities.
9. Open a savings account You should save enough to cover your expenses for six months, before you consider other riskier investments. The bank interest rates on short-term Certificates of Deposit are low, but your savings are guaranteed by the Federal Deposit Insurance Corporation. Money market funds, as offered by major institutions like Vanguard, Fidelity and T. Rowe Price, pay a better rate of return than banks, but your savings are not guaranteed by the government. Note that money market funds are NOT stock mutual funds
10. Pay Yourself First When you receive your paycheck, put 20% of it into you savings, if you can possibly do so. Make the rest of the money last you until the next payday. Have a goal for your savings, like a new home, a college education, getting out of debt, a career change, travel, family care, retirement, a major home improvement.
11. Set Up a Budget 11. Budget for your expenses. Keep track of what you spend daily on coffee, snacks, fast food and impulse buys. It helps to control those little purchases and you’ll be amazed at how much you save. Another big leak in your budget is the amount you spend eating out and buying gifts. Homemade meals do taste better than fast food and eating out should be considered a treat, not a way of life. You may want to set yourself an allowance for personal spending. Some people divide their cash into envelopes for all the spending categories, like groceries, insurance, gifts, etc., and stick to these limits.
12. Find Inexpensive Amusements Let’s face it; being on a budget is no fun. To avoid getting discouraged, you need to make your own fun, so that you’re not drawn back into the buy and spend cycle. Be creative and plan activities that don’t involve big bucks. You can plan family game night with homemade snacks, movie night around the DVD player, a picnic in the park or a potluck dinner with friends. The library offers books and videos at no charge. Family crafting skills can replace items that you used to purchase. Many museums and other venues wave their admission charge on one day of the week. Trading services with other families can also save money on baby-sitting, lawn care, home repairs and gently used clothing.
13. Don't Give Up On Yourself Perseverence is the secret to financial success. If you fall off the horse, if you forgo your careful budget for an impulsive and unnecessary purchase, don’t feel that all is lost. Recognize that you are a creature of habits, and changing takes time. Then just get yourself back up on your budget and give that horse another ride.
14. Begin Now The skills for saving money and building personal wealth begin with discipline and necessity. Many people have their backs to the wall before they are willing to change their perception and handling of money. I hope you will take this advice to heart, plan for the future, learn to survive difficult financial times, cope with challenges and emergencies, and realize financial success in your life.
I hope you have a very happy day.
----- Surfer Sam
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