Do ostriches really hide their heads in the sand when they’re afraid? I’m not sure about ostriches but I know many people do this when confronted with their personal finances. They figure if they ignore the facts, there won’t be a problem.
The problem with this behavior is that by not taking a good hard look at your personal finances, you’re probably making an already bad thing worse. I know I’m generalizing, some people will end up smelling like a rose because their spending never got out of control. However, for the others, the sooner you take charge, the better off you’ll be.
Everyone cares about their situation. The next step is making yourself aware of it. You’ve got to understand how you’re doing from a financial standpoint. Are you deep in credit card debt or do you pay those “bad boys” off monthly? Give yourself a gold star if you pay them off monthly, otherwise make a budget, stick to it and pay off the debt. This includes paying off other debt as well. Get the cars and the house paid off as soon as you practically can.
If you’re out of credit card debt or getting there, do you have emergency savings in case an unexpected situation comes up and you aren’t able to work? With the job market being so uncertain, having a year’s worth of savings to cover your fixed expenses and a smaller percentage of your variable expenses is a wonderful idea.
It’s also a great idea to have money saved up outside of your retirement account(s) in order to take advantage of opportunities that come your way or to fund short and intermediate term goals.
Of course we can’t forget retirement. Save what you can. If you’re in your twenties or thirties, 10% should suffice for most people. If you start saving for retirement after that, 15% or more depending on your unique situation is a better idea. What if you just can’t squeeze that much out? Simple answer: do what you can. Anything is much better than nothing. As you go along, push yourself to increase the percentage of your income that you save. If it’s done gradually enough, it doesn’t hurt nearly as much as it would going from 0 to 10 or 15% cold turkey.
The absolute, best person to grab this personal finance bull by the horns is you! If you can manage it by yourself and will manage it, do it. Otherwise, consider using a fee-only financial planner that charges by the hour and doesn’t require a minimum of investable assets. The members of the Garrett Planning Network can work with you to build a plan or answer questions or even to act as a cheerleader. If you live in the Las Vegas area, consider me. You can find out more about me and my philosophy at: www.DuncanFinancialPlanning.com .
A financial plan helps you by bringing clarity to your current situation and focusing on the steps you need to take to set and achieve your financial goals.
