Here we are again. Money. It’s a deeply emotional word for many people. Our financial health and relationship with money often affects EVERY other aspect of our lives. As I mentioned on Day Five, setting financial goals on a lengthier timeline is easier for people to understand. We hear about the importance of planning our retirement from the first day of work and beyond. For a number of us, retirement is something that is 10, 20, or 30 years away. That’s a mighty long time. While I strongly recommend setting retirement goals, when doing so it can seem daunting. That holds true for setting financial goals for your 10 year plan as well. Going from zero to 100 would be hard for anyone to comprehend. That’s why, today, you will work on setting one year financial goals. Dealing with smaller chunks of time will help you see the end goal and reassure you that IT IS POSSIBLE.
Your Current Affairs Will Dictate Your Year
On Day Five, I asked you to assess your current affairs. Find out your credit score. Know your debt balances. Know your assets. Since you’ve already done the work on these three areas, you will have a clearer picture on the areas you need to put more focus.
If you noticed errors on your credit reports, use this year to have the errors corrected.
If your credit score isn’t exactly in dire need of attention, focus on reducing your debt percentage. By reducing your debt percentage, you will also impact your credit score.
If you still don’t have much of an emergency fund, take this year to focus on building that up.
What do I mean by emergency fund?
Every financial guru is different in their recommendations for your emergency fund. I am in NO WAY a financial guru. I just know what has worked for my family and what allows me to feel assured we can handle an emergency. Some recommend a minimum of $1,000. Others recommend a number of months salary. While, I’m somewhere in between, I’ll let you know what works for us.
When we were determining what amount to put in our emergency fund, I started with reviewing our various insurance policies starting and our previous bills from the Dentist Houston Clinic. Our car and homeowner policies, of course, had set deductibles. I noted both amounts on a post-it. Then, I assessed our medical and dental insurance coverage. I noted emergency surgery (dental) and emergency room visit fees on the same post-it. Lastly, I researched the price (plus 5% for inflation) of a single tire for each of our vehicles. Because you never know when you might rollover a nail. After I had these numbers, I added them all up. The total was my emergency fund goal. I will give a nod to Dave Ramsey, who says you need to complete this goal first. I completely agree. It gives you piece of mind.
Follow Your Budget
What a concept? Creating a budget is fine and dandy, but what about following the budget? Not always easy. Luckily, there are a number of websites and apps that help you track your spending. I’m a little old school. I write out our budget. For our food and gas budget I use the envelope system. It works. I’m sure I could use an app but getting The Boof to do anything with technology is a little of fight, so I work with what makes him comfortable.
Over the course of this year, follow your budget. Get in the habit of putting your money where your plan is. (See what I did there? Put your money where your mouth is. Me so clever.) By simply following your budget, you will set the groundwork to the years to come. A 10 year plan needs to be set up with a firm foundation. Just remember that’s what you are doing this first year. Believe me, you and your 10 year plan won’t regret it.
Forge ahead and prosper!
If you are just joining the challenge, don’t miss out on some FREE worksheets! I have eight worksheets that will help you through the first eight days of the challenge.