14 Steps to Financial Clarity

Ever wonder how far along you are on your journey to financial independence? Sometimes it's not always easy to see the path in front of you or to know if you're even headed in the right direction. Well, here are 14 questions that can give you a clearer, more concise picture of where you are now and where you eventually want to end up.

Each question has a possible answer of 1, 2, or 3. The more 1's you have, the closer you are to being on track. The more 3's you have … well, let's just say your financial plan needs some work.

Take your time as you work through your answers to the questions. Make sure you examine how the questions (and your answers) reflect your life. Many people find answering these questions and facing their current financial situation uncomfortable but it's necessary that you face your money demons head on. Be honest and take notes on what's going through your head. If a question causes you to ask other questions, jot them down and do some research for the answers. By the time you've finished answering all the questions, you'll have a firm grasp not only on where you are today but where you want to be tomorrow.

Family Member Evaluation

Question #1

  1. My family will be OK financially if I passed away.
  2. My family will struggle financially for a while if I passed away.
  3. My family will be financially devastated if I passed away.

Question #2

  1. I am completely debt free.
  2. It will take me a few years to get debt free, but I am currently working on a plan.
  3. I have no clue how to get out of debt.

Question #3

  1. I never worry about finances.
  2. Sometimes I worry about finances.
  3. I feel stressed out when I think about my finances.

Question #4

  1. I never feel I'm living paycheck to paycheck.
  2. Sometimes I feel I'm living paycheck to paycheck.
  3. I always feel I'm living paycheck to paycheck.

Question #5

  1. I'm on track for retirement.
  2. I've started saving towards retirement, but I'm still not on track.
  3. I haven't started saving towards retirement.

Question #6

  1. I never have challenges with my bank account.
  2. I periodically have challenges with my bank account.
  3. My bank account is out of control.

Question #7

  1. I currently have an updated will / living will and consult my attorney with legal matters.
  2. I have a will / living will, but I don't know how current it is.
  3. I don't have a will / living will at all, and I don't know where to start.

Question #8

  1. I have a very organized filing system.
  2. I have a filing system in place that I use sometimes.
  3. I don't file anything. I just kind of live day to day.

Question #9

  1. I always pay my bills on time.
  2. Usually, I find myself making payment arrangements.
  3. I frequently receive disconnect, shut-off, and eviction notices.

Question #10

  1. I've recently reviewed my credit report and I'm pleased with its content and score.
  2. Within the last year I've checked my credit report, but it needs improvement.
  3. I have no idea what's on my credit report or how to access it.

Question #11

  1. I always stick to my budget when I shop.
  2. Sometimes I go over my budget, but I normally return the extra items.
  3. I frequently spend more than I expected.

Question #12

  1. I have 3-6 months of living expenses set aside in case of emergencies.
  2. I have some cash in savings, but I just can't get into the groove of making the balance grow.
  3. What's an Emergency Fund?

Question #13

  1. I have several streams of income coming in, so losing one or two wouldn't bother me.
  2. I keep a part time job on the side just in case things go bad with my main job.
  3. I'm lucky to have the job I have.

Question #14

  1. I can afford to send my kids to whatever college or university they want to go to.
  2. I can probably help my kids with some tuition for a local community college.
  3. My kids are on their own for college.

Evaluating Your Answers

As you read through the questions and selected the answer that best fit your current financial situation, how did that make you feel? Did it give you a feeling of satisfaction that you've made a lot of the correct financial moves for you and your family and confirmed that you're on the right track? Or did they give you a sense that you still have a lot of work ahead of you?

Here's a bit of background on the questions and what you can do to improve your score and your financial security.

Question #1: Do you have the right amount and type of life insurance in place to provide for your family if you pass away? Many people tend to put this off for far too long only addressing it after a loved one passes away. There's no need to put off taking care of this very affordable financial tool. Get a quote today.

Question #2: Do you have a Debt Freedom Date and a plan for becoming completely debt free? Don't let anyone put their thumb on you or keep it there any longer than you have to.

Question #3: Feeling stressed about your finances can have a huge affect on your health and how you deal with the world on a daily basis. One of the benefits of addressing these questions and gaining clarity about your finances is that it enables you to identify the weak points of your financial plan so that you can strengthen them.

Question #4: When you're always living hand to mouth from week to week, it's not a fun way to live. One of the best ways to change this is to put into place an automatic weekly savings plan. It can be as little as $5 a week but as you see your balance grow, you'll be able to sleep better and breath easier.

Question #5: Retirement planning is one of those things that most people know they need to address but that they put off for years and years. One day they realize they're about to retire and kick themselves for not having planned for it years ago.

Question #6: Bank accounts can be a great tool for building financial stability … if you have a good relationship with them. However, for many people, their bank account statement is a source of worry and frustration.

Question #7: While no one likes to think they'll ever pass away, planning ahead for what happens afterward with your finances can relieve you of a huge mental burden when it comes to taking care of your loved ones.

Question #8: Is your desk at home or kitchen table covered with old bills, bank statements, or notices? Do you ever pay bills late because you've misplaced the envelope it came in? If so, you're not alone. But it doesn't need to stay that way.

Question #9: Staying ahead of your bills can be a matter of managing your priorities. Are you bills Urgent, Important, or Not Important and do you know the difference between them?

Question #10: Having a good handle on your available credit and your credit score can have a huge impact on your finances.

Question #11: Budgeting is one of those things that people tend to under-appreciate. Many people look on it as a painful task that prevents them from living a fun, enjoyable day-to-day life but that's not how it needs to be.

Question #12: It's not if, but when you'll have an emergency. Emergencies happen every day and it's not if, but when one is going to come knocking at your door. Establishing an emergency fund can be a great way to create a safety net.

Question #13: Putting all you eggs in one basket isn't the best way to secure your financial future. The possibility of a job loss through layoff, medical emergency, or firing can put a real damper on your long term financial goals. Casting a wide net when it comes to generating an income can provide you real financial security.

Question #14: College tuition is no joke. With the repayment of college loans taking decades in some circumstances, planning ahead for this very important financial task can be as important as planning for retirement.

Closing Thoughts

By checking your progress regularly and putting into place the tools you need to move from mostly 3's to mostly 1's, you're giving yourself the peace of mind that your finances are stable and you're moving in the right direction.

Imagine relaxing and unwinding after a stressful day at work. As you put your feet up, you know that you have a detailed financial plan to remove that stress from your life and that all the steps to execute that plan are already in place. All you need to do is execute the plan. What are you waiting for? Take control and make it happen! Your future is waiting!

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