Daily Preparedness

As with a medical ‘physical’, a Fiscal Physical requires you to look at the history, examine the patient, evaluate and make recommendations based your findings. Those recommendations (even if they are a bitter pill to swallow) may just find you better able to accomplish all of the other goals you set for yourself It is important to remember that how we handle the financial aspects of our lives has a direct relationship to all other areas of our lives!

Put on that white coat, grab your financial records, and let’s get started on your Fiscal Physical!

The first step is to analyze the incoming money. Where is it coming from? Is it a secure source of income? Can you increase your income this year? Are you taking advantage of all pre-tax options? Are the exemptions declared on your W-2 adequate but not excessive?

Next, look at where your money has gone. Everyone has a different method of and different comfort level of tracking how they spend their money. Some people must record every expense they make while others have broad (or no) categories. Wherever you are in that spectrum, are you comfortable with it? Did you have money left over after meeting necessary expenses? Do you have absolutely NO idea where your money went? Are you saving appropriately? Do you have emergency funds? Are you planning for the future? Do you even know how much you have saved? Are both spouses equally aware of and agree to the allocation of money?

Now, see if the outgoing and incoming are relative to each other. If you have debt beyond a reasonable home, reliable transportation and as few student loans as possible, your incoming and outgoing are out of balance. If you feel stressed about your expenses and shudder every time an envelope with a window arrives in the mail, you need some Financial ICU time! Time is truly of the essence and you must make the decision now that you will become Financially Fit.

After assessing your incoming and outgoing status, analyze all of your accounts. This includes credit cards, loans, mortgage, checking accounts, savings accounts, 401-Ks, IRA’s, CD’s, stocks or other investment vehicles. As you perform this review, check to see if you are optimizing your investments, saving enough and have a plan for the future. Review your insurance coverage in health, life, home, liability and auto. Pull out your ‘What If’ notebook to be certain that a copy of each account’s statement is in your notebook.

If you have a balanced in and out flow, still continue on with the physical. You might find that you could be saving more; you can plan ahead and utilize the money that you are saving wisely.

For those that need a trip to the Money ICU, there are some bitter pills that you may need to swallow in order to get yourself back into a state of Financial Health. Look carefully at where your money is going. If you don’t know, start tracking ALL of your expenses. Do this for at least a month. Remember, little expenditures just like little savings add up quickly. Look for any area in which you might be able to cut expenses right now. Do you really need cable TV? Multiple cars? Dinners out? Fast food? Have the courage to honestly assess where you are, where you want to be and how you can remedy any mistakes that you have made. If necessary, cut up or stash away your credit cards. Cancel any ‘extras’ that you can and begin to take control of your life today.

The next step, no matter what your financial health, is to plan ahead. As you look at the blank pages of the calendar begin to list all of the expenses you know are coming and, if possible, what month they will be due. If needed, use one of those free calendars and actually write down the expenses for each month. For example, do you have youth going to camps this summer? Tuition due? Vacations? Birthdays? Christmas—it comes every single December so start planning now! Do you have taxes due in certain months? Insurance premiums? Other holiday expenses—Halloween, Easter, Valentine’s Day, Mother’s Day, Father’s Day. On each holiday estimate what you will spend and develop a budget NOW! Don’t forget back to school expenses—clothes, shoes, books, supplies, and all of those fees that seem to add up each September. And of course there is prom, homecoming, etc, etc, etc.

After writing down the date-defined expenses, begin to think about those big bills that are likely to come due this year. Does the car need new tires? The house need a new roof? What about the furnace and a/c? Chimney cleaning? Landscaping? College tuition? Wedding? Need a new refrigerator?

Now, write down the things or experiences that you would like to have—things like new furniture, a vacation, new television, etc. Prioritize this list and consult other family members to see if they have known needs or wants.

You should now have a fairly comprehensive outlook of your major expenses for the next year. Of course, you have to add in all of those other ‘necessities’ such as mortgage, food, insurance, donations, etc, etc. Fairly quickly, you will be able to see how much of your family income can be allotted to each need, goal and desire.

All planned expenses can now be saved for. If the entire family is aware of your combined goals, saving can take on the feel of a contest. You have a reason in mind—a goal, something the ‘team’ can work toward. And if there are bitter pills to swallow, you can do it together!

Another benefit of listing all of your needs and wants is that you can watch for sales, clearances or even giveaways of items on your list. Certain items are cheapest at certain times of the year. Knowing this allows you to get the most for every one of your dollars.

Being in control, or in other words, being frugal with your resources, is the best guarantee any of us can have of achieving and maintaining good financial health. Regardless of income, frugality is a principle that yields not only physical, but emotional and spiritual well-being.