Financial Literacy: Turning Chess into Checkers

“My finances are so complicated, it’s not even worth my time figuring them out.”

This is a clear example of how lack of attention can exacerbate a problem. Many people look at personal finance as a complicated discipline that takes a long time to master. While accumulating wealth and building a strong foundation does take time, understanding your own financial situation can take less than a week, or even a few hours if you are aggressive.

What I aim to do here is put together a small checklist that anyone can use that will help them turn their chess game into a relaxing game of checkers. I think for a lot of folks their finances are so scattered it can be hard to figure out where to start. While I fully know that this will not encompass everyone, it should help a vast majority of people who are looking to get a jump start on their finances.

The Check List

1. What's your income? 

It’s always a great idea to start at the top. Most people don't know what they make per month and this causes them to lose out on a few different things. First, they may miss an extra annual bonus every year that is equal to their monthly income. Second, they may get behind on bills due to lack of planning which can lead to late fees and more accrued interest. And lastly, they miss out on the benefit on controlling their bills instead of their bills controlling them. How much do you make per week, two weeks, or month? Write it down at the top, that is where we will start. 

2. What are your core expenses? 

Take a look at the following categories and write them as well as your total cost below your income on the same piece of paper: 

  • Rent/Mortgage
  • Utilities (Gas, Electric & Water)
  • Transportation Costs
  • Groceries
  • Communication (Cell phone, etc.) 

I have no doubt that you will have more expenses than that, but listing just "the basics" can help you get a grasp on what's important. If you are unsure about the groceries and transportation categories, look back at the last month or two of your bank/credit card statements and add them up.

3. What are your debt expenses?

Most people have some form of debt. Credit cards, auto loan, student loan, medical bills, and mortgages are the five most common. List your balance, APR, and monthly payment for each debt that you have. 

4. What are your entertainment expenses? 

Do you go out to eat? If so, how much? Don't cheat! Be honest, it'll help you in the long run. Do you have Netflix, Hulu, Cable, Internet, or Sling? This is also where you list you and your spouse's spending money. Maybe you've never hashed it out that way, but this is a good time to start allocating for each of you (if you're married). 

5. What are your financial goals? 

Retirement? Vacation? No college debt for your kids? All of those things are great goals, but you need smaller goals to get you there. 

What we just walked through was similar to an initial assessment that I go through with clients. This is a start and as you can see, it isn't complicated. It just takes time and a little effort. If you have no desire of getting your finances in order, you won't. Simple as that. 

What do I do from here?

Check out all 9 Moves of the financial plan I've written. Start with Moves #1 and #2 and go from there. Oh, yeah. You can also call RTM Solutions or drop us an email if you have any questions; all free, all the time.