[1] Taking StockThe first step to getting your personal finances under control is to clearly understand where you are. Review all of your finances listing your assets and debts, including any loans, credit cards or other liabilities. Many banks will go through a similar process to evaluate your financial health, where they compare your income and assets with your debts and liabilities to come up with a percentage called your debt to equity ratio. It is important to be honest and thorough, as you will need to use this information to help build your financial plan.
Find a method of tracking your personal finances, either with a simple book and paper ledger or with automatic software packages like Quicken or Microsoft Money. This will not only help you track and budget how you spend your money, but the software can integrate with many online banking services which allow you to keep a virtually real-time picture of your spending. The important thing to do is to be consistent and make sure all of your spending and budgeting is tracked for a complete picture.
Once you have an accurate picture of your personal finances, you need to identify your short and long term goals. When do you want to retire? Are there specific purchases you are planning? Are there any time frames to consider? Are you planning for your children's education or just interested in being debt-free?
Once you understand what's important to you, you will understand what needs to be done to get there: how much you'll need to earn, how much you'll need to save, and over what period of time. Basically, know where you are, and where you want to be.
Original From personalfinance.tipcentral.net
2 comments:
I am looking forward to reading the other 9 tips as well because the number one point is very particle and can be practiced by any individual. Great post indeed!
Writing down on the paper importantnt. your want miss for payments, expenses or receivables
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