As the saying goes, "if you fail to plan, plan to fail." So here are a few tips to kick start the action plan.
Goal Setting and Budgeting
Establish a financial goal and a time-line for achieving this goal. There can be sub-goals to aim towards the main goal. Make sure the goals are written down. Writing down goals crystallizes the image in ones mind and also there is a visual document to refer to whenever the need arises. In fact goals should be reviewed regularly, since they may need to be changed as and when circumstances change. There is nothing wrong in changing goals as long as the focus on achieving it is not changed
Prepare a monthly budget to help in achieving the goal. Again, this might have to be varied according to changing circumstances. However, remembering to keep the budget in tune with the goal and being realistic about it is very important. There is nothing more stressful than trying to work to a budget that is totally out of line and not giving any joy.
Establish a Savings Plan
Put into place a savings plan as soon as possible. It does not have to be a big amount initially. A regular saving of a few dollars can add up to a tidy sum over a period of time. More importantly, being able to show the lenders the capacity and the discipline to save will greatly enhance the prospects of obtaining a loan.
Minimize Other Debts
- Getting a credit card should be avoided. However, sometimes a credit card is a necessary evil but the limit should be kept as low as possible. This assists in several ways; keeps the outgoings low, helps to curb unnecessary spending and establishes a credit record. Very importantly though it is essential to pay off the total balance each month. This helps cardholders to avoid interest charges.
- Car Loans, if needed, should be arranged with the lowest monthly repayments. This may involve a lump sum payment at the end of the term of the loan. This is sometimes called a 'balloon' payment. If the lump sum cannot be paid off at the end of the initial term, then it can be refinanced for a further term.
- Get into the habit of paying bills, all bills- telephone, utilities, car loans, credit cards- on time. This gives a sense of achievement as well as establishing a good rating with the credit providers. Home Buyers with a poor credit history have a tough time getting a loan.
Above all don't stress about it. Yes, it is important. Yes, it is the future. However, it is not going to help losing ones health to stress whilst planning for the future. There may not be a future to plan for!
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