Do you have a financial plan?

If you want to manage your life well, the first plan you must have is a financial plan. A financial plan will help to insure that you have the money to spend when you have the time to spend it. There is no sense having a lot of extra time if you do not have the money to go anywhere or do anything. Although staying at home can be relaxing and fun, we need to have the choice of doing nothing or something. Money gives us this choice. A financial plan should have both present and projected expenses and it should be as detailed as possible.

You can start your financial plan with using a software program like Money or you can simply use an Excel spreadsheet. In one column, list all your monthly debts, for instance, Visa or insurance or mortgage. In the columns across the top, you should put each month from the time you start your plan. Your bills will be very similar from month to month but you can list your monthly bills and expenses for the next 12 months by cutting and pasting from the first month you start your plan. If you know of any differences that are coming up, you can place these figures in the appropriate box. Fill the boxes for the next upcoming month with any fixed or essential expenses. You can then use another page to set up a “forecast” for projected expenses that are desirable but not essential. For instance, I want to buy a new pair of roller blades. I will put the item in the left hand column and then under a future month, I will budget the item in. You can use this second page for items like clothes, vacations, concerts etc. By having both sheets you can see first what you must pay and then second what you would like to buy.

Whenever, you have left over income, or need to prioritize you will have your priorities and needs already mapped out. I also add a third spreadsheet where I track large recurring debts such as home equity loans or credit card loans. This third spreadsheet helps me track my monthly payments on these debts and how much I have left to pay on each debt. Well, does this sound simple? It is! But the benefits are huge. You will take charge of your life and your finances. You will know where your money is going. You will be able to prioritize and spend your money on the things that are most important and eventually you will be debt free and have few financial worries. It really works. Have you started yet? Why not? What is holding you back?