Are your finances on target?
Many times we simply take a glance at our checking and savings account to judge our financial status. And sometimes after that pricey beach trip, we don’t even want to know if our finances are on target.
But, it is important to occasionally go down this checklist of questions to evaluate where you are. If you are not where you need to be, it may be time to adjust your spending or consolidate debt.
1. How much money do I have?
Create a balance sheet showing assets and liabilities. You may be pleasantly surprised. Or, you may discover that you need to manage your money more effectively.
2. How much debt do I have?
If you want to get the most out of your finances, it is virtually a requirement that you get out of debt. Getting out of debt means that you have full control over your income – and that is an incredible feeling.
It will leave you with more money for savings and investing – and even more for spending. Being debt-free will make it easier to quit a job you do not like. It will free your mind of the worry and stress that come with debt
3. Is my emergency fund well-stocked?
We normally think of having an emergency fund as being a short-term financial goal. However, experts say your emergency fund should be stocked with 3-6 months living expenses. With an increase in the number of people impacted by natural disasters, job loss and major illness, having money tucked away is a necessity rather than a feel-good emotion.
4. How much do I have in long-term savings?
Have you calculated how much you need to save annually in order to retire comfortably? Saving for your retirement should be a priority — the earlier you start, the better.
If your employer offers a 401k or other savings plan, take advantage of it. And talk with your banker about other ways to save for your retirement.
5. What is my mortgage rate?
Should you consider refinancing? Mortgage rates are currently low. Even though there are costs associated with refinancing, it may be to your advantage if you can get a reduced interest rate.
If you do not want to refinance, consider paying extra on your mortgage payment. The more you pay on your principal balance, the less you owe in interest for the next payment.
Setting a financial goal is the first step toward achieving financial success. However, reaching your goals must include progress checks along the way. Those who try and keep trying will find success.