October is all about finances, both as Credit Awareness month and Financial Planning month. Having a written financial plan in place that includes the following is the best way to make your dreams, whatever they may be, come true.
- A financial plan is a comprehensive statement of your long-term objectives for security and well-being, with a saving and investing strategy for achieving those objectives.
- Determine Net Worth
- Know Cash Flow
- Set Priorities
- Net Worth is the total value of your assets minus the total value of your liabilities.
- Assets-cash and items you could sell for cash
- Liabilities-debts, loans, mortgage
- Cash Flow is a way of tracking all of your income and expenses on a monthly basis.
- Positive Cash Flow-extra money to use as you please
- Negative Cash Flow-time to trim expenses or get a second job!
- Set your priorities and use a budget to manage your money and adjust your cash flow accordingly.
- Pay off debt
- Save for a home
- Set-up emergency fund and retirement accounts
If your dream includes home ownership, be sure to talk to a lender as you put together your financial plan.