Do you have a Money Plan?
By Kristin McGrath
May 4, 2012
As an exercise for a class I took six years ago, we were asked to write down where we wanted to be in five years: personally, financially and professionally. I left my paper blank. Asked that question today, I’d be able to jot down several things in the “professional” category, as my once nebulous career is now taking shape. But, financially, I still don’t have a five-year plan.
I don’t have a savings goal. I don’t have any plans to buy a house. I simply make sure there’s enough money in the bank to pay rent and other monthly expenses, and some of my paycheck automatically goes toward my 401(k).
That’s not to say I’m irresponsible with my money. I have an emergency savings fund that I contribute to religiously, a Roth IRA and a money market account. Yet I have no concrete plans for my money and no specific goals. That makes me all the more impressed by friends who track their savings on spreadsheets — and the brave personal finance bloggers who hold themselves accountable by writing about their money goals.
Still, having a money plan doesn’t have to be as complicated as spreadsheets — or intimidating as tracking your net worth for an Internet audience. NPR recently had a segment with financial coach Alvin Hall about how to set and reach financial goals.
The key, according to Hall, is giving yourself a long-term savings goal (a certain number of dollars by a certain age or point in time) plus a reward for reaching benchmarks along the way. Cut out the things that are draining money from achieving those goals and set what you save aside. Even if you’re setting aside nothing but pocket change each week, you’re still moving forward. Modest progress is still progress. And modest rewards for reaching short-term goals will only give fuel to that progress.
Sounds easy. Yet, still, my paper is blank.
Do you have a money plan? How do you track your progress?
With setting financial goals in mind, here’s some inspiration from the personal finance blogosphere:
The Simple Dollar explores the idea of starting a savings groupwith friends and family.
Good Financial Cents suggests five ways to reduce money anxiety.
Money Under 30 give some tips for “born spenders” who are trying to save.
Punch Debt in the Face admits a decrease in net worth.
Wise Bread shares some advice for going on a spending fast.
Mom’s Plans has some debt repayment motivation — take a peek at how much interest you’re paying.