It’s time. Time to gather your family around and sit down at the kitchen table to take a hard look at your financial future.
The economy won’t, the pundits say, get well for a year or two. Meanwhile, more jobs will be shed – and finding a job, if you’re laid off, will get harder and harder. It’s time to get serious about taking all the steps you can take to get your finances in order.
Invite teenagers, but don’t include younger children. Make a pact – a solemn promise – that you will all keep your tempers and will not utter a single word of blame. Figuring out how you got into this mess is non-productive; figuring out how to take charge of your financial future is productive. Enlist everyone’s help and everyone’s commitment to this
So set aside several hours. And that’s just to get started.
Here’s what you will need on hand as you begin:
• Your paid bills
• Your check books
• Your credit card statements
• Information on loans
• Information on investments
• Insurance information
Here’s the family council agenda: Decide what your overall goal is: Pay off credit cards? Build up a cash reserve? Determine how you would deal with a layoff?
Sort bills into 3 piles:
1. Fixed expenses (You pay exactly the same amount every month.)
2. Flexible expenses (You could reduce these amounts.)
3. Frills (You could eliminate these expenses).
Figure out how much money is required every month to pay essential bills. This step is difficult, because it means looking at every category – such as food – and deciding if you can reduce the amount spent. But coming up with a dollar amount that you must have every month is key to your planning.
Most people’s spending includes lots of “walking around money.” Do you know, for example, exactly how much you spent on lunches in the last month? Or latte grandes? Or eating out? You may need to write down every cent you spend for a period of time to get a handle on these expenditures. How much money could you save, for example, if everyone in the family began to take their lunch to school or work?
Bet you’ve already spent more time than four hours. Decide on your next steps and schedule your next meeting to continue your planning. Check out www.tightwad.com and www.pennypincher.com for ideas on how to conserve what you have.
You may decide to adopt this Depression Era motto for your family:
Use it up
Wear it out
Make it do
Or do without.
Make being smart about money your family project.
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