Personal Finance

Taking control of your finances 

June 10, 2000 

You may ask, why take control of my finances? Simple - financial security brings freedom and power. Freedom to do what you want; and power to use your money constructively and to make a difference where it really matters!

Here are the first steps to Taking control of your finances:

Change your attitude - start believing that small steps will and do make a difference! Evaluate your attitude towards material possessions! Do you really need another jacket or a newer car? Or is it to impress or keep up with others? You may find that there are many things one can do without or postpone getting.

Determine what you want - set short, medium and long term goals. Specify time frames but be realistic. For example,

*Short term goal (6 months) - getting out of debt!

*Medium term goal (1 year) - establishing an emergency fund & savings!

*Long term goal (2-3 years) - purchasing a home or developing an investment plan!

Identify steps to achieve each of your goals - For some, getting out of debt can be a long and tedious process for many people. The longer it takes you, the more discouraged you may get. If you are determined to get out of debt, you may need to take drastic steps such as getting a second job or substantially curtailing your spending.

Document - It is imperative that you keep track of where your money goes. Limit the use of cash and use checks or checkcards as much as possible for groceries, gasoline, dining out, etc. Knowing where your money goes will help you identify where the excesses are and where you need to make changes.

Start saving - This is an important step to take for everyone whether you have debt or not for two reasons:

you develop the habit of saving even if it’s a small amount every month.

the positive psychological impact of knowing you are saving goes a long way to motivate you to save even more.

A simple way that is very effective and painless is using direct deposit of a small portion of your paycheck into a savings account. Since you don’t see the money in your checking account, you can build up a savings account without being tempted to spend the money.

Ultimately, the goal is to live within our means and have enough money set aside for saving, investing and also for giving. The first step is usually the hardest but you will find that it is also the most rewarding once you do take it!