- Evaluate your Current Financial Status
Take the time to completely evaluate your current financial status. Carefully examine your fixed expenses, your debt, your income and investment/savings accounts. It is also important to evaluate your high value assets including jewelry, antiques, artwork, vehicles and the like. Create a spreadsheet for monthly expenses, against your income. If you are spending more money each month than you are bringing in, some tough choices will have to be made.
- Develop a Budget Based on your Current Income
If your income does not meet your current debt and expense load, it may be time to downsize. The goal is to live within your income, while still having extra to save and invest. Remember to include debt payoff in your budget that exceeds the minimum payment requirements. Perhaps moving to a smaller, more affordable home is the answer. Or cutting back on entertainment expenses or maybe it is a combination. Be sure to include the funding of an emergency fund, in addition to investments and savings. Remember, kids get more expensive as they get older – not less expensive. Work now to create financial security for your future.
- Payoff debt
Although mentioned above, it is worth repeating. Credit card debt, second mortgages and signatures loans all carry interest. The sooner you can payoff your debt (especially credit card debt), the sooner you can be financially healthy. Work with an accountant with experience in financial planning to help you focus on your priorities and create the financial security you desire.
- Involve Kids in the Budget
Kids, from an early age, need to learn to make good financial decisions. Involve your kids in the budget process, especially if downsizing is essential. Be open and honest with your kids about your financial situation and financial goals. A good way to engage them in the process is to allow them to pick a monthly fun activity or an annual vacation to help budget for. When they want to spend money, remind them that money can go towards feeding the fund for the activity.
- Set Financial Goals
Start to think beyond your current financial situation and look towards your future. This includes your future after the kids have left the nest. Start thinking towards your retirement goals and how college tuition is going to be paid for. Savings and investments are crucial at this stage; treat these two funds as you do any debts. Pay yourself first in the form of your savings and investment accounts.
- Start a Small Business
If you need additional income to help you reach your financial goals, consider starting a small business that you can run from your home. Unlike a part-time job, a home-based business won’t take you away from your family and depending on the type of business you choose, they can even help!
- Consult with an Accountant
Professional accountants do more than just taxes. They are your allies in developing sound financial practices. Estate planning, taxes, budgeting and investments are their expertise. Schedule an appointment today to learn more about how you can move toward greater financial freedom with the assistance of an accountant that has your best interests in mind. For more information on Barry Bandler Accounting & Tax Services and effective wealth building, call today.
