Personal Financial Planning

I don't believe I would be too far off the mark if I were to say that most of us are familiar with the saying: "The journey of a thousand miles begins with a single step." Personally, I like how Thoreau put it: "If a man does not keep pace with his companions, perhaps it is because he hears a different drummer. Let him step to the music he hears, however measured or far away."

Whether we are beginning a long journey or following our own drummer, the truth is we are all going somewhere. We are all heading into the future. And step-by-step we will all traverse our course into tomorrow. As we travel and negotiate the obstacles along the way, we will face many challenges that require choices to be made. How we make those choices, how we navigate the treacherous waters of life, will eventually lead us to the finality of all things. Looking back at choices not made will not leave room for recourse, but sadly, for some, regret.

When it comes to your financial future there are certain choices you can make now that will make your steps into the future more sure. PERSONAL FINANCIAL PLANNING at the present will help pave the road of your future.

Three key activities comprise the triangle of power in personal finance planning:

• Controlling your day-to-day financial affairs
• Choosing and following a course toward long-term financial goals
• Building a financial safety net to prevent financial disasters

All three activities are important, but let's start with just a single step--the first step on your road to financial freedom: Controlling your day-to-day financial affairs. Perhaps this task may seem daunting, monotonous, or ridiculous, but whatever it is, it is the first key to a brighter financial future.

Taking control of your finances and making a budget

WHY BUDGET?
Millionaire or mailroom clerk, if you're not budgeting your income, you're missing out on the most important tool you have to make your money work for you. It doesn't matter if you're talking thousands of dollars; tens of thousands of dollars, or just a modest weekly paycheck, if you're not making your money work for you, then you're making it work for someone else!

Let's face it, budgeting can be a real chore, but it also can be a very rewarding chore. Budgeting and tracking your expenses gives you a strong sense of how your money is spent and can help you reach your financial goals, whatever they are:

Getting a handle on your spending, implementing a budget, and saving for the future will not only be rewarding to you in the future, but it will also create a positive atmosphere in which loving parents can nurture their children. Imagine enjoying your 'golden years' with the added satisfaction that your children have grown into financially responsible adults.

(Kingdom Financial Principles is an important tool to help you live debt-free. Click here for more details.)

DON'T THINK BUDGET, THINK FREEDOM
If you're like most people, just the word "budget" may make you feel anxious or uneasy. Many are simply fearful of the constraints they feel a budget will put on them and their spending fun.

If I go on a budget I will be limiting my freedom to spend money, is the common misconception. But friend, don't be misled, the purpose of the budget is not to limit your freedom but to increase it. Instead of thinking of it as a straightjacket, think of your budget as a straightjacket REMOVER, a system that will put your money to work and free you forever from falling short of your financial goals.

WHERE DID MY MONEY GO? (AKA-how did I get so deep in debt?)
Has this happened to you: You look at your checkbook balance at the end of the month and say, "Where did my money go," or "I must have forgotten to deposit that check," so you desperately look at your register only to find the check was indeed deposited? Where did your money go? You know it's not a magician's trick. You know David Copperfield didn't sneak in and make your hard-earned dollars disappear. You know deep down in where the responsibility really lies.

Nickels and Dimes
Let's face it, sadly, for too many; people have nickel(ed) and dime(d) themselves into debt! And without keeping detailed records of your activities, you will too. You'll never realize how all those small expenditures are affecting your checkbook today and your financial future tomorrow.
The following example shows how quickly the cost of ordinary consumer goods can turn into an eye-opening revelation of how fast money can disappear in one year:

• Daily cup of coffee - $390
• Fast food lunch each day - $2600
• 2 packs of cigarettes a day - $3285
• 2 paperbacks and 1 hardcover book each month - $690
• 3 drinks at a bar each week - $780
• 3 six-packs of beer each week - $624

That's a whopping $8,369 for those grabbing all the gusto they can in mainstream America. Now I know that many of you will be saying: "Wait just a minute. I don't go to the bar each week" or "I don't smoke 2 packs a day" or…well, that's okay, I'm a Christian myself and don't smoke or drink. I don't follow mainstream America. I'm one of those, I guess, who follows a "different drummer." But the principle is the same, whether it's cigarettes or beer or any of a hundred other consumer goods, unless we keep careful tabs on our spending habits we'll be nickel(ing) and dim(ing) ourselves right into debt.

DO I NEED A SOFTWARE PROGRAM?
Yes and no. You don't need to invest in fancy software in order to do a budget, but a good software program WILL make the job easier, and we all know life is hard enough already?

Being able to print out graphs and reports from your PC can serve as a motivation for entering all that data.

Basic comparison of budget versus actual expenses by category
Detailed information such as investments, assets, liabilities, etc.,
Print personal financial statements showing your net income and net worth.

Whether you use sophisticated personal finance software or a couple of pieces of paper and a pencil, the important thing is that you get on the road to financial freedom by starting a budget today.