4 Steps to Get Your Finances Under Control

Setting up a financial plan that incorporates your faith involves four important steps. I will show you how to create a financial plan that adds more meaning to your life, helps you clarify your purpose, and helps you take steps in the right direction. Where there is a will, there is a way. Here are the four steps we will cover:

1. Set financial goals.
2. Prioritize your financial goals.
3. Take a financial inventory.
4. Set your plan in motion.

Step One: Set Financial Goals

Your goals should be based on needs rather than just wants. You may sometimes allow greedy intentions to get the best of you. When you learn contentment, you often begin to set goals that focus on your greatest needs rather than selfish desires. With financial freedom being a goal of many, setting proper financial goals will help you move in that direction.

Setting goals is a very important part of life in general and of finan­cial planning in particular. Before you actually invest your money, you should spend some time considering and setting your personal financial goals. For example, do you want to retire early? Would you like to start your own business soon? Do you need to pay for your children’s col­lege educations? Would you like to buy or build a new house? Would you like to fund a ministry project or help a worthy cause?

In addi­tion to these, there are several other questions you should consider to develop an appropriate financial plan. First, what is your time horizon for your goals? Second, what is your investment risk tolerance? Third, what are your liquidity needs? Finally, what are the most appropriate investments to help you achieve your goals?

Step Two: Prioritize Your Financial Goals

It is important to begin the financial planning process by clarifying your priorities. Whether you want to save for a new home, start a new business, send children or grandchildren off to college, fund a ministry, or plan for retirement, planning is often a key to success. To get started, write down what you want to accomplish in order of importance. Once your list is prioritized, start right away with the first goal or accomplish­ment on your list. What will it take you to realize this accomplishment? Keep focused on your goal and work toward your desired outcome until it is complete. Once this goal is completed, start the process again with the second priority on your list, then the third, fourth, fifth, and so on. It does not matter if you are not able to do everything within a presched­uled period of time. However, what is important is that you have decided the relative importance of the things you want to complete and are de­cisive about your priorities. Keep your priorities in a daily planner and strive to stick to them. Make this a daily habit.

Step Three: Take a Financial Inventory

If you don’t know where you are today, how can you possibly know if you are heading in the right direction? How are you at saving money for your future? Though you may have bank accounts, CDs, retirement mutual funds, 401(k)s, and other investments, is there a method to the madness? Is there a process or a plan? If not, how do you gauge whether you are on track or not? Do you have investments? It is difficult for God to bless investments when there are none.

To make progress, you need to determine where you stand today. This reality check consists of compiling all of your statements, savings and checking account documents, investment statements, credit card statements, loan and mortgage receipts, and 401(k) accounts, if you have any. In other words, everything you own or owe. Are you living at your peak financial potential or wasting away valuable dollars each day? Challenge yourself to get a good handle on your finances. The most important things to analyze are:

✓ How much income do you have on a monthly basis?

✓ What are your monthly expenses?

✓ Are you saving?

✓ What is the total amount you owe?

✓ What is your net worth (assets minus liabilities)?

✓ How much are you giving?

✓ Are you buying assets or liabilities?

By taking an up-to-date inventory of your assets, liabilities, income, and expenses, you can get a current picture of your financial situation. This will also tell you in what financial direction you are heading.

You may need to reset your financial thermostat—have a new out­look on wealth. A positive attitude goes a long way. It helps to support happiness and success. Every step in the right direction will enable you to gain momentum. As you incorporate your faith into your financial plan, keep in mind the driving passion behind your financial goals. Accumulating assets for a greater purpose can be a good thing, but ac­cumulating solely for the purposes of greed can be a lost cause.

Step Four: Set Your Plan in Motion

Many mistakes are made simply because people get overwhelmed with financial statements, bills, and all the endless papers. They become unor­ganized and things seem more complicated than they really are. In order to change your financial future, I recommend that you put as much of your finances on autopilot as you can. The key to this is to develop a system. Once you know where you want to go, take steps forward!  No plan will work if no action is taken.

Here are a few simple steps you can take today:

✓ Get organized.

✓ Get rid of paperwork you’re sure you don’t need.

✓ Consolidate accounts.

✓ Use direct deposit.

✓ Put your savings on autopilot.

✓ Automate recurring bills.

✓ Explore banking and bill paying over the Internet.