“Reading, after a certain age, diverts the mind too much from its creative pursuits. Any man who reads too much and uses his own brain too little falls into lazy habits of thinking.” – Albert Einstein
There is no shortage of financial information freely available today. There are thousands of blogs, podcats, and sites devoted to personal finance. It’s difficult at times not to go into information overload on these sources.
Unfortunately, I find that a lot of people do just that. They read and read more and expect their finances to just magically improve.
The purpose of this post was to devise a list, regardless of the current situation you’re in, that you can use to take action. Specifically, if you’re reading a lot on personal finance, you should have already completed the following.
It’s not reading post after post that allows you to reach your financial goals; it’s doing the right things.
- Know your next goal – If you don’t have your next financial goal written down, what then are you reading personal finance blogs for?
- Set up a system to monitor your next goal – Now that you have a goal, set up a system to monitor your progress. I have Mint email monthly progress reports on my financial goals. Another way is track your goal is by doing a monthly review.
- Automate that goal – Since you have a goal and are monitoring that goal, why not just automate the savings? If you’re still paying off debt, log in to your account and increase your monthly payment. If you’re saving, schedule a withdrawal from your bank account to your investment account.
- Negotiate with your cable and Internet provider – This is an easy phone call. Your provider paid a lot of money to acquire you as a customer. They will do everything not to lose you. What’s worked for me in the past is just mentioning competitor’s prices, even a introductory offer, and asking them to match.
- Sell useless stuff - Somebody can use and will pay money for you old computer, mobile phone, camera, clothes, shoes, and just about anything else.
- Perform a financial SWOT analysis – On a blank piece of paper, draw a line horizontally and vertically down the centers. Now, label each of the 4 boxes; Strengths, Weaknesses, Opportunities, and Threats. Come up with at least 5 things for each of the four sections. This task takes 20 minutes, but you should have 5 high impact actions to take afterwards.
- Sign up an account Mint or have another way to track your finances – The goal is to have a system in place to track your finances. I recommend Mint but there are other options, such as a simple spreadsheet.
- Stop paying fees and join a high interest bank – If you’re being charged banking fees, and I don’t care how many ATM’s they have, switch to a free high interest bank. My favorite online bank is ING Direct but local banks offer great deals too.
- Get a copy of your credit report from annualcreditreport.com – Review what’s on your credit report. If you don’t recognize everything listed, call to have it removed.
- Get your credit score from MyFico - Get in the habit of checking your FICO score once a year. It costs just $15, but knowing what your score is and how to improve it, saves you thousands.
- Write an investment policy statement – Write out on paper your investment strategy, including your rebalancing strategy. Sign at the bottom. Pull this statement out, whenever you’re about to make a change in your portfolio.
- Update your beneficiaries – This takes 5 minutes. Log in to your investment and insurance accounts and make sure that if something did happen to you, your money is going to the right person. This is especially important for anyone who was recently married.
- Calculate your net worth or other meaningful statistics – Get out a spreadsheet, or let Mint do it for you. Have an idea of where you stand and what direction you’re headed at all times.
- Set a target retirement date – Set an exact date in which you will stop working (it will change and that’s OK).
- Know what’s ahead. – Write out the major expenses occurring in the next 1, 5, and 10 years. If you can’t start saving now for those goals, decide when.
None of the above takes more than an hour long. Some actions take minutes.
Once you have these steps completed, return to reading. After all, I myself enjoy reading most of the same blogs you do. Just remember, it’s action that matters.
Photo by: Paul-H-