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There is no advance warning for accidents, illnesses, and other life-altering events. Many people find themselves in a precarious financial situation soon after an unexpected injury or illness because they didn’t plan for an emergency. When you are young and healthy it doesn’t seem necessary to worry about things that “might” happen, but a single tragic moment can turn your life and finances upside down if you are unprepared. Having control of your money is one of the most important responsibilities in life. The following steps can help you achieve financial stability.

Recognizing Your Need

The first step in getting your money under control is to recognize your need. There are several signs that indicate you are out of control with your finances.

  • Your spending habits exceed your earnings.
  • You have bounced one or more checks, which resulted in expensive fees.
  • You are paying bills late, and have fallen behind on one or more obligations.
  • You run out of money before your next paycheck.
  • You are making the minimum payment on your credit cards.
  • You are using your credit cards for basic living expenses, including groceries and utilities.

These are just a few of the indicators that are a warning sign. If you have just one of these problems, you need to make drastic changes immediately.

Write A Personal Financial Plan

It really isn’t difficult to write a plan, but you have to be honest with yourself in order to be successful. Your plan will show where your finances are presently, where they need to be, and how you plan to get them there. Your plan will be your guide to financial stability. It’s important to understand this is not a plan to make you rich, but simply a tool to help you live within your present means, make wise spending decisions, and save for an emergency. Your financial plan should include the following sections.

  • An outline and summary of your current financial obligations
  • A list of goals and objectives
  • A plan to accomplish your goals

Financial Summary

In your financial summary, include your cash flow and your net worth. List all our sources of income and the monthly amount of money each one provides under your cash flow. Write all your monthly expenses under cash flow as well. Total the income and deduct the expenses to get a picture of your current financial state. If you discover you are outspending your income, changes have to be made promptly in order to reduce your expenses. If you are fortunate and discover your income is greater than what you pay out each month, you can start a savings plan that will provide security. You can also pay off some of your debts sooner.

Net Worth

Your net worth is the sum total of your assets minus your liabilities. Only the equity in a home or car is considered an asset. If you were to sell all your possessions and pay off your bills, your net worth would be the amount you have left. If the amount is negative, you have a lot of work to do to get back on track with your finances. If the amount is a small positive, you still have a lot of work to do to grow your worth. If you set a goal of decreasing your liabilities by two percent each month and increasing your assets by three percent, you will have an increase of five percent in your net worth each month. These percentages are just an example, and you have to select realistic amounts based on your current net worth and debt amount.


Your goals are the financial objectives you want to achieve. Make a list of your goals and an estimated completion date. Paying off the credit card with the highest interest might be your first goal, with an estimated payoff date of 12 months. The money you pay on interest is money that doesn’t go into food, clothing, or savings. You know which bills need to be paid off first, and you should set up your goal list accordingly. Along with the goal, explain how you plan to achieve it. Look for ways to cut back on spending. Do you really need to eat out twice a week? Can you make pizza at home instead of ordering delivery? How often do you go to the movies? Look at all the areas where you can reduce spending and apply them to each of your goals.

You can create a financial plan that will work, but the effort to make it a success must come from you. Make this the year you pull your finances together, and start building a healthy savings account.