This month is Pride Month, which has become a time to celebrate the LGBTQ community. It’s also a time when many people are thinking about how they can improve their financial situation. No matter what letter you identify with within the LGBTQ rainbow, there are certain fundamental actions you must take to get your finances in order. So, be proud of yourself for taking care of your financial well-being.
1. Organize yourself!
You must be aware of the whereabouts of your financial records. Gather every document you can think of that has anything to do with your money. Consider your loan agreement, bank statements (checking and savings), your most recent tax filing, any investment statements, insurance policies (home/renters, vehicle, health, long-term care, and so on), and work benefit statements.
Generally, any document that has an impact on your financial life should be kept on hand. You should also understand what the document is, what it covers, and how it might help you. If you don’t comprehend any of these documents, you should consider meeting with a fee-only financial planner. My recommendation is to put all of this information in one folder and keep them accessible.
2. Be aware of what you owe and what you possess
You must be aware of the amount of cash flow you have and how it is flowing. Make a simple personal balance sheet that shows your assets, obligations, and any equity you have. This is a summary of where you are and what you have at the moment.
On one side, write down all of your assets and equity, such as your checking account, savings account, investments, house worth, automobile value, and so on. Next, make a list of all your debts, including credit card balances, vehicle loans, school loans, mortgages, etc. Subtract your obligations from your assets to arrive at your current net worth. Don’t be disheartened if the results are unfavorable.
3. Take control of your cash flow
This is when things start to become serious. This is where the rubber hits the road if you didn’t like the outcomes from tip two. You must become more aware of your spending habits. Even if your findings from tip two were favorable, you should now be able to control and plan your spending. For your monthly financial flow, you must devise spending and saving strategy.
Over time, you’ll begin to manage your cash flow on an annual basis, but for now, focus on one month at a time. Spend with intention! Spend your money wisely and on items that will benefit you both financially and emotionally.
Always take care of yourself first! This is crucial for accumulating money. Make sure you’re saving from your paycheck; make sure you’re registered in any employer-sponsored matching funds programs; and make saving a habit. A decent goal to set for yourself is to save 20% or more of whatever income you have. Don’t stress if you aren’t there yet; just get started.