Get Your Personal Finances in Order

Signed, DCH
by Chloe June 26th, 2017 0 comments

Granted we will cover business finance in later articles, I really just wanted to touch on personal finance today. There is no way to achieve financial security in business if you don't know what to do with its profit on a personal level. 

The personal finance plan is a way to manage and prioritize personal finances for anyone at any stage in their finances. For many, it feels like way too much to keep up with and not enough time; which is very understandable because financial literacy is skipped over in most education curriculum. So you are definitely not alone.  Here's a little crash course on personal finance and how to get back in control today!

Create a Financial Plan. 

All this means is to write out your goals for your finances. Come up with the steps to achieve those goals and put an expiration date on it - whether the goal is paying back your student loans or setting up your retirement, WRITE IT OUT! This gives you a concise direction while aiding you with benchmarks in which you can track your progress.  

Check your plan regularly to note financial circumstances or change. Also, of course, to motivate you to keep going... I mean you are halfway there! 

Organize Your Record.

This one goes without saying, you need to know where all your financial records are, to successfully manage them, right? Here are a few records you should probably be creating a filing system for:      

  • Investment Accounts
  • Bank Statements
  • Tax Returns
  • Mortgage and Credit Card Statements
  • Insurance Policies
  • Estate Planning Documents
 
The reason I recommend a filing system is because it is the easiest way to keep all the documents together. Save yourself time while having easy access to them.
 
BONUS: Create a personal inventory of all your possessions and locate any relatable documents (receipts, warranties, or invoices). This not only is proof of its value for further financial planning purposes, it is a safety net in case the unfortunate happens and you have to make that claim to the insurance company. You have all your documents ready to go!
 

Know Your Net Worth. 

Your sole goal is to increase your net worth. This can be found when you subtract your assets (investments, bank accounts, etc) against your liabilities ( debt, insurance, etc). If your assets outweigh your liabilities your net worth will be positive, but vice versa paints a dramatically different picture. 
 
Simply put, your net worth is your financial health and knowing your standing will aid you in making better financial decisions. It is wise to check your status on a year to year basis. 
 

Work Your Budget.

This is truly the key, and yet so slept on. Create a budget and then apply it! The way to be effective is to create a money calendar of your income and outcome. The income is inclusive of wages, balances,  or any type of monthly income received. The outcome is all your expenses such as mortgage, credit cards, or even daycare. Then you make a very detail spending plan or a "budget." And don't forget to add your savings! This makes logging the long hours worthwhile, promising to pay yourself 20-40% of your salary or income (untouched by needs or desire) will guarantee you see exceptional financial growth in your "income" section of your calendar. Treat your savings like a bill!
 
Here's a quick way to get started budgeting! 
 

The reason why budgeting is so crucial is simply for the fact it identifies where you are wasting money while allowing you to see exactly where your money has a higher priority. It can also prophesy some financial hardship on the cusp of your financial standing.  

Rainy Day Fund. 

This is exactly what it sounds like, it's an emergency fund to help you in times of financial hardship. You want to be able to have enough untapped money to survive off of for a minimum of 6 months. 

Please note that if you are self-employed or a freelancer you ideally want to have a year in this fund. This is due to the fact that job security uncertain. 

Minimize Your Debts. 

Maybe you want a loan to start your business or you finally found your dream home, whatever the case, debt can put a damper on things. It's like trying to swim with an anchor attached to your ankles. The credit card or loan's high interest rate is eating at your income and if your debt is exhausting over 15% of your budget, it is time to put urgency into reducing it. 

If this sounds like you please check out my interview with our fellow sister and wealth advisor, Terrell Dinkins as she tells us how to build wealth. 

Estate Planning Documents

If you are making your own income and you're your sole provider, these four documents are a must:

 

  • A Will 
  • Power of Attorney, whoever you appoint handles your legal and financial matters in your absence. 
  •  A Living Will, telling what should happen to you medically if you are unable to answer for yourself.
  • Health-Care Power of Attorney, every state has its own name for this, but this essentially appoints someone to speak on your behalf in regards to your medical interest.

 

Insurance.

If you want a financially sound future, leaving room for risk is imperative. And the reason for insurance is to alleviate some of the risks of having a health crisis or car issues that could possibly bankrupt you.

Don't wait for tomorrow to get started ladies, change your standing today! Reclaim your financial control! 
 
Cheers && Harmony

 

 

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about the author: Chloe
Chloe Hughes is the editor at Eliza Mary Global Network, a network that connects women of color entrepreneurs and business leaders globally. She is a Content Creator at signeddch.com who helps her clients color their dreams real through her writing, design, and photography skills. She is a vegan fattie who loves to go hiking with her two dogs, You can connect with Chloe at chloe@emgnlife.com. Learn more about the Eliza Mary Global Network at www.emgnlife.com.