Many of us rip through life doing our best to balance a hectic career, juggle a social calendar, develop personal relationships, and even raise a family. One of the best things you can do for yourself is to take some time to decide what you want out of your future, especially your financial future. Whether it is to buy a new home, retire at 50, or insure your toddler can afford the college of choice, today is the day to set those goals and create some kind of plan to achieve them. Most people never plan, and the results show.
Do a self-assessment. Like a doctor looking at x-rays, you need to get a snapshot of your financial condition. To do this, create a Balance Sheet and Cash Flow Statement on yourself. Hopefully you remember this from Accounting 101, if not get someone to help you – it is that important. With this, you will quickly see where your money is going - and where it is not.
Once you know where you are financially, you can begin planning how you can get where you want to go, but like a baby you will need to take those small first steps. Build up an emergency fund with three to six months of expenses. I recommend an online savings account because they are less available than accounts linked to the dreaded ATM card in your pocket, and the rates are higher too. HSBC Bank currently pays 5.0% online, which is higher than their CDs. ING Direct is another bank, and they’ll give you $25 to open the account. You have to like free money! In general, think of saving like it’s another bill and pay yourself
Next, take a look at the credit cards you are carrying. Many of them, particularly store cards, have rates as high as 30 percent. Unless you are a fan of loan-sharking, cut them up now. Many banks are offering 0% and balance transfer promotions that you can take advantage of.
These things can fix your short term financial picture, but you must think long term to accumulate real wealth. Investing in stocks, bonds, mutual funds or real estate are just a few things you can begin doing to achieve financial independence, and you will be surprised at how little money you need to begin with. I recommend doing research on whatever you decide; in fact you should seek the advice of a financial planner. How do you find a good one? Talk to friends or relative and see who they use. Another way is to seek out a Certified Financial Planner (www.cfp.com). Like a CPA, a CFP has taken extra effort to complete and pass a stringent qualification exam, and must uphold very high ethical standards to use the designation. If you want, interview two or three until you find someone you can learn to trust. The advice received will be well worth whatever cost, but only if you act on it.
RESOURCES
- Black Enterprise – www.Blackenterprise.com BLACK ENTERPRISE is the premier business, investing, and wealth-building resource for African Americans. Since 1970, BLACK ENTERPRISE has provided essential business information and advice to professionals, corporate executives, entrepreneurs, and decision makers.
- SisterSpeak Online Magazine – www.sisterspeakonline.com SisterSpeak is a unique, online lifestyle magazine that celebrates the lives and experiences of Black women, and all women, the world over. Our goal is to inform, inspire and empower women of all ages to live lives of boundless beauty, passion, power and purpose.
- Small Business Administration – www.sba.gov Information resource for small businesses, small business owners and prospective business owners.
- GreenPath – www.greenpath.com Free and confidential counseling. GreenPath is a non-profit organization that offers customized, personal solutions to help you get out of debt.
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