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Did you write any New Year’s Resolutions this year? If yes, did your resolutions include mastering your finances? Roughly 40% of people write down New Year’s Resolutions and making “better financial decisions” is one of the most popular. Yet studies show that only about 9% of people reach their desired outcome. Part of the problem is that people often try to change too many things at once. Oftentimes, the best way to achieve a goal is to break it down into small, manageable chunks over a period of time. Otherwise, people get overwhelmed and eventually discouraged. What most people need is a good coach. This is where Inveduco comes into play.
Inveduco stands for Investment Education Coach and we are here to coach you to achieve your financial goals, whether that’s getting out of debt, investing for retirement, saving for a major purchase, or starting your own business. This is why we are now offering a free 12-month program to help you take control of your finances. In addition to our regular articles, we will publish a special article each month with specific suggestions for you to measurably improve your financial situation.
There is so much bad advice out there that people don’t know whom to trust when it comes to their money. Our mission is to help people navigate the complex world of money and investing, and it is our sincere wish to help our readers succeed in meeting their financial goals. All we ask is for you to help us grow and reach more people. If you feel like you are benefiting from this information, share these links with your family and friends. The more we grow, the more quality articles we’ll be able to write!
Back to our program. Here are a few questions we would like you to ask yourself:
-Are you comfortable with your investing strategy?
-Do you know what your Net Worth is?
-Are you actively tracking your financial goals?
-Do you know how much money you need to be financially independent?
-Do you have all the right types of insurance?
-Do you have a Will?
-Do you have an emergency fund with 6 to 12 months’ worth of living expenses?
-Have you taken steps to protect your identity?
If you answered “no” or “I don’t know” to any of these questions, then this program is for you! We will break down our recommendations into simple steps, which you should be able to complete in a very short amount of time each month.
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January: Know where you are
When it comes to money, many people don’t have a clear idea of their overall financial picture and they often focus on a single aspect of their finances, such as their income or debts. But before we can create a plan to reach our goals, it is critical to know where we currently stand in order to be able to make reasonably accurate projections into the future. Many people put money into their 401(k)’s and hope for the best instead of developing a financial plan. This is what this program is designed to help you with. Inveduco is here to coach and encourage you, but you’ll have to do the work. However, we’ll break down the tasks into simple steps to make it as painless as possible. You should be able to complete the steps below in 30 minutes to an hour. We highly recommend for you to use a dedicated notebook to complete the exercises in this program and to keep track of your financial progress over the next 12 months. This way you will be able to trace your financial path and you will have access to all your financial numbers whenever you need them.
One final piece of advice: don’t try to be perfect. If you don’t know an exact number, write down your best estimate for now. You can always correct the information later on. In fact, you should update this information at least once a year to keep track of your goals. Now let’s get started!
Step 1: Let’s start with your assets. Write down a list of all your bank accounts, retirement accounts, your home (if you’re a homeowner), and any other assets you might own. Next to each asset, write down your current balance or approximate market value. Finally, add all those numbers up.
Step 2: List all your debts. Make sure to include any credit card debts, student loans, car loans, mortgage loans, etc. Write down your current balance (or best estimate) next to each item. Also, write down the interest rate you are paying for each one. Add up all of your liabilities.
Step 3: Subtract your liabilities (step 2) from your assets (step 1). Is your Net Worth positive or negative? Congratulations! You just calculated your approximate net worth. Now let’s take it a step further.
Step 4: On a separate page, write down a list of your recurring monthly expenses. Make sure to include rent/mortgage payments, food, transportation, insurance, utilities, Internet, phone service, cable TV (are you still wasting money on cable?), and any recurring medical expenses.
Step 5: Turn to a new page again and write down how much you are saving and/or investing each month. Include any money you regularly add to your savings accounts, 401(k), TSP, Roth IRA, etc. Put an asterisk next to money saved exclusively for retirement.
Now that you’ve completed these steps, we will use this information to coach you to create a plan which will help you achieve your financial goals. Once again, congratulations on taking the first critical steps to mastering your finances. Make sure to keep these numbers handy so you’ll be ready for the next steps!
Remember to check in every month for the next steps or better yet, like us on Facebook or sign up for our free newsletter!