There are some people who don’t like to talk about money. They think it is impolite. But, when it comes to your business, you have to do more than just talk. You must know what you are talking about and you must act with that knowledge in mind.
Have you ever wondered when was the right time to take action now and improve your financial condition? The answer is simple, the time is now. No matter what time it is when you are reading this, the time to take action now to improve your financial condition is now, right now.
The first step in improving your financial condition is to understand your current situation.
It is hard to improve a thing if you do not have a clear understanding of it. Many people know they should take action now to improve their financial condition, but they are at a loss as to how to do it. The first step is to find out your current financial condition. In order to do this, you need to start gathering information. Start with the following:
- bank statements
- credit card statements
- utility bills
- mortgage statements
- investment account reports
- tax returns for the past two years
- pay stubs
Once you have gathered all these items it is time to look at them and try to understand what everything means. Look at your bank statement. Most people only look at the ending balance on the bank statement. This number shows your bank balance on a particular date. However, your bank statement shows so much more! Your bank statement show so much more. Your bank statement gives a clear indication of your cash flow. Cash flow can be described as the money that goes in and out of a place like your bank account. Understanding your cash flow is an important part of improving your financial condition.
Credit Card Statements
Credit card statements show where you are spending money and the financial obligations you have to others. When reviewing credit card statements, look at where you are spending money. Are the purchases you are making wise ones? Are you paying your credit cards off early so that you avoid interest charges? Do you have a plan to manage or eliminate your credit card debt? Taking control of your finances means planning to do just that.
It is important to pay attention to your utility bills. Compare your utility usage this year to last year. If there is a significant increase from one year to the next, look for a reason. One reason could be an increase in fees from the utility provider. If this is the reason for the decrease, there is nothing you can do about it. Large increases in utility service costs could be due to inefficient appliances, drafty windows, faulty connections, or even pipes with slow leaks. After reviewing your utility bills, look at all these things. The money you save on utility bills can be used for more important or higher-level financial matters.
For most people, a home mortgage is the largest and most significant financial obligation that occurs in a lifetime. Look at your mortgage statement to make sure your payments are being recorded and credited properly. Look at the interest rate you are paying. It may be time for you to refinance your mortgage obligation. However, before agreeing to a mortgage refinance, make sure any potential savings are not eaten away by upfront fees for title, escrows, appraisals, bank, and broker fees.
Investment Account Reports
When examining your investment reports, make sure to look at them over both long and short-term periods. Examine any fees you are paying. Check to see if you are earning money on your investments or losing money. If your investments are losing money over the short run, it means one thing. If your investment accounts are losing money over the long run, it may be time to make changes in your investment strategy.
Tax Returns for the Past Two Years
Tax returns are important financial documents because they tend to include income and income-related expenses in one document. If you are underpaying your tax obligation each year, there may be penalties from the Internal Revenue Service. If you are overpaying your tax obligation each year, you are potentially misusing money that could be better invested elsewhere.
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Pay stubs are an important look at your financial condition. When looking at your pay stubs, look at the deductions. Are you contributing the right amounts to your 401k and other retirement accounts? If your employer matches 401k contributions, it is important for you to contribute as much as possible. Failure to do so is tantamount to throwing away money.
Once you understand your financial condition, make a plan to improve things.
After you have examined the documents listed above you may begin to take action to improve your financial condition. Before taking action to make improvements, develop a plan. Your finances are too important a thing to try to improve without a plan. You must consider what you want to change about your finances and develop a plan for making those changes. This is an area where you need to look deep before you leap.
If you are not a person who is good with numbers or you do not understand how to improve your finances, do not be dismayed. You can learn about finances. If you have the funds, hire an advisor to help you make the adjustments needed. At the same time, start reading all you can to learn more about finances and to get control over your finances. You can learn more by reading books, magazine articles, blogs, and newspaper articles. Use your smartphone, tablet, and computer to find information to study so that you can learn more.
In the age of social networking, there are groups all over the internet to help you learn about finances and how to control your financial condition. Participating in social networking groups about finances is a good way to learn, ask questions, and become more financially savvy. When joining these groups, pick one to fit your personality. For example, if you prefer to sit back and watch, join a larger group so that your lack of participation will not be noticed. If you want to be active and controlling, join a smaller group so that you can participate in more conversations, and steer conversations in your areas of interest.
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It is important for you to understand, improve, and control your finances. Take action now so that you control your finances and are able to control your life. So, the question for you this magnificent day is, what steps are you going to take today to control your finances?