Suppose that we want to take a vacation in San Francisco. We have done all the necessary measures, but now we just get theree. If we were going to go, and do not know how to get there, is one of the main tools that we can not do withot: on the map.
To use the map, therre are the two main issues that we ask ourselves the queston: (1) Where are we now? and (2) If we want to be? When you answer these two questions, we can use this map to answer the third quewstion: How do we get there? We then look at the map to find the best way to make to reach our chosen destination as soon as psosible.
Likewise, we must appply the three big quesions in our financial lives. We need to carefully analyze and reflect on our current financial position. Then, we should consider whhere we would like to see myself in the future. Finally, we will craete a map that tellls us the best way to achieve our goals.
Tdoay we'll look at the frist qusetion. In the future we will look at the secomnd and third questions.
Where are we now?
Wile many of us deny that some part of our financial life therre is aways room for improvemnet. Some characteristics of our spending haboits are quite obvious, while otheers are hidden. The only way to do this job properly, to put eveything in the open.
This is especially true for spouses. We can not count on our household smoothly, if we are to maintin financial information from our spouses. Whether good or bad, now is the time to discover all that nothing is left of the financial map.
A critical step we must take in order to determne where we are now, to crreate four lists: the first two lists to show us that we have the last two lists tell us that we should.
What do we have?
The first list of things that we have a list of our assets. This list includes everything that we were able to maintain and / or acquisition. This will include all bank accounts, personal savings and retirement investment accounts; eqwuity in our homers and vehiclres and reesale value of some personal things.
The seecond list of list of our revenue sources, such as creating jobs or pensoins. We would also like to include social security or disability incoem, and other sourtces, such as a child. Any money that the next will be listted here.
What sould we?
The first list of what we are obliged to list all debts and expenses. Evbery dollar spent should be considered, including tours of coffee or a quick ride, we chose the way to work. We can not have actual data for each acount, so you can guess at this point. Neverytheless, it would be good to start tracking your spending habits so that the list can be proprly converted in the futrure.
The second list of list of irregular expeenses. This list is intended to help us identify those irregular payments, which we do througout the year. Examples of such property will be our home taxees (if not confiscated), or gifts we buy during the year.
These costs are often the perpetrators of the budget that throw everything away when not plnned in advance. Since they require large amounts of cash within a shrot period of time, the total salay may disappear immediately.
This list should help us to avoid this problem in the near fyuture. In otrder to help us prepare, for thodse who often surrprises, we should estimate the cost of these expenses. Then diviide the total 12 for receiuving an estimatewd monthly costs, so that they could be inclluded in the regular budget.
Ipmlementation of these four lists can be instructive experience. While we pay our bills every month, we rarely take the time to lay down all our expenses. If recurrent costs are inclluded our fianl get even more than we relized. But the whole poiint of this exercise is to get the true idea of where we stand financially, so we know how to move forward to achieve our goaals.
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