Financial Tools: Know Your Worth

financial toolsAmericans are working longer hours, taking fewer vacations, and retiring later in life than ever before.  Retirement, savings, and credit accounts may still be recovering from the economic down turn we are slowly creeping out of.  This is why, now, more than ever it’s important to be aware of your financial health and take the steps that you need to ensure your and your families financial security and stability.  Personal financial well-being, learning what it is, and how to apply it to your life is a great course that I highly recommend if you are trying to get a financial plan in place.

With so much technology at our fingertips we have a bevvy of websites and applications that are vying for our business, many of which are even free.  There are plenty of great tools at your fingertips to help you manage your money and help to teach you to make smarter decisions.  So, why not use one of them to help you manage your finances.  The faster that we learn which tools we can make work for us, (and our money), the faster that we can begin to save a lot of time and unnecessary stress in the long run.  Explore the basics and get an in depth view of some of the fundamentals of Personal Financial Planning with this great Financial Planning – Exploring the Basics course.

The biggest financial lesson that my parents ever taught me, was how to budget.  Now, when you look around you may see, or even know people who just can’t seem to grasp the concept of not spending above their means.  In other words, don’t spend more than you make.  This bad habit is a cause of ruin for many, some of which you may even know.  Over the years you may have come across friends or parents of friends who re-financed their homes at the high, took out a variable interest rate believing that they would be able to pay it back and that rates would never get too bad.  They went on lavish spending sprees, new cars, new boats, fancy vacations, all thanks to the equity that they pulled out of their house.  Next thing they knew, the housing market had crashed, interest rates were high, and they were losing their house to foreclosure.  My parents weren’t cheap skates by any means, they just knew what they could afford and couldn’t.  They were also smart enough to not put themselves in a bad financial situation if they could avoid it.  Anytime I pull my credit card out I can almost see my mom shaking her finger at me and telling me that “if you don’t have the cash to pay for it, then don’t buy it”.  My dad also still has the old school mentality that houses are good investments, not something that should be used as a withdrawal account unless the situation is dire.

If you’re interested in learning how to create a budget and stick to it, Budgeting – Small Steps to Financial Stability will show teach you how to create a budget that fits your lifestyle.

Besides learning how to come up with, and sticking to your budget there are other financial tools that can help you to achieve financial security.  Here is a list of financial tools that you can begin to use to get started on your path to financial stability.  I’m also including a few tips on how to come up with a budget that will work for you and your situation.

Get Real

Create a realistic budget that can accommodate your lifestyle without making you question every cent that you are spending.  Write down all of your expenses, include how much you spend on groceries and food each week for a month.  Write down your mortgage and car payments, utility bills and include some room for entertainment expenses, like a night at the movies.  Be honest with yourself and also realistic when it comes to how much money you have going out each month.  Once your ‘ideal’ budget has been created, sit down and determine your debt to income ratio.  In order to do this, add all of your monthly expenses up and look at how much you bring home each month.  If your bills (debt) is about 15-20% of your net income then you will have to cut back on your excess spending and kiss your movie nights good bye for a little while.  You also need to review your budget again and find other areas that you can begin to cut back on.  Budgeting is so much more than simply restricting what you spend.  It’s about the decisions, insight, and discipline you will learn when it comes to managing your finances.  Learn the secret to creating a family budget that leads you out of debt with the tips and tricks that you will learn in our great Managing Your Family Budget course.

financial tools

Go Virtual

There are a variety of software programs on the internet that are ready and willing to help you get your finances in order.  One of the many advantages of some of them is that they are also free to use.  Because, when you’re already watching your dollars and cents who wants to go out and spend money on an app to help you control your money, am I right.  Try using a site like Mint.com, MoneyStrands.com, and Betterment.com will help you complete a variety of financial tasks.  Mint.com for example is a budget tracker that will quickly and easily show you exactly how where your money is going.  You can begin to see exactly how much is going where and use the analysis that they provide to help change your habits and maybe even help you to curb your spending.  They also have a mobile app available that you can use to access your finances anytime, anywhere.

Reduce Your Spending

Coming up with a budget will really be the hardest and most important part of this whole process.  Once you’ve figured out what your debt to income ratio is and if there are any areas that you can cut back on, it’s time to begin to think about how you can reduce your spending.  Write down a list of all of the excess ways that you feel you are spending money, can you cut back on buying your coffee every morning and begin to make it at home instead?  Keep track of all of the money that you are saving once you begin to reduce your spending and consider opening a separate account to put it.  Join thousands of others that want to learn more ways to reduce their monthly spending by enrolling in our, Clip Your Budget, using coupons to save money course.

inflation rate formula

Pay Yourself

Another great way to put a little money away, is to pay yourself.  Set up an automatic transfer to a savings account each pay period.  This way a portion of your check will be deposited into your savings as well as checking account.  Avoid the temptation of avoiding a withdrawal from this account by making sure that it’s not in any way connected to your main account.

There is also a great wealth of knowledge that can be learned by simply researching how to budget on the internet or in personal finance books.  Check out your local library and find books on retirement planning, investments, and financial planning.  Don’t wait until you are in a bad financial situation to begin planning.  Begin today and learn how to take back your finances.