The Golden Ticket to Personal Financial Responsibility by Haney Sweda

Today, with our economy in disarray, it is vital to arm yourself with the tools for financial responsibility.  The dynamic process of monitoring and evaluating your financial position can be achieved through five easy steps;

1.          Assess – know your current position.  How much do you have; how much do you owe?  A balance sheet – lists all your assets (home, car(s), belongings, bank accounts, stocks, other real estate, etc.); list all your debts (mortgage, auto loan(s), credit cards, other loans, etc.).  How much do profit or lose? An income statement – lists all your income (salary, interest, dividends, other, etc.); list all your expenses (payments mortgage and car loans, groceries, utilities, insurance, clothing, entertainment, households, etc.).
2.          Set goals – Know where you are going? Both short and long term.  Examples – Short term; increase savings account by a required amount each week/month; reduce monthly expenses.  Long term; buy a house; trade your car; have a certain amount saved by a specific age or for your child’s college.
3.         Create the plan – Get from current position to your goal!  The plan should detail the route from the assessment to your short and long term goals.  How are you going to afford the new house/car; the amount you will save on a weekly/monthly basis; the additional income from a second job or new job; the sale of items you own, etc..  This plan is your budget.
4.         Stick to your plan – Discipline, consistency and perseverance.  Once you complete steps 1-3, the hard work starts, you will encounter situations that tempt you; deals on financing a house or car that may seem attractive, but require you to adjust your goals; sales on “wants” – a new LCD TV or other electronics; and many other obstacles, if you did not plan on it have the discipline, consistency and perseverance to follow your plan/budget. (Note, emergency’s happen, that require a plan budget adjustment, emergency’s are medical, death, or  maybe a major purchase not expected new HVAC or car repair, these you will have to adjust your plan/budget)
5.     .    Monitor /reevaluate – As you execute your plan to achieve your goals, watch look and listen.  Things change, the key is to have a plan and incorporate these changes, therefore no surprise. 

There is no Golden Ticket to financial responsibility; there is common sense and hard decisions.  It can be made easier with the use of personal accounting software; most banks that offer on line banking will supply you with free personal accounting software like Quicken.