I am finishing up taking a personal finance class this semester, and it has really gotten me thinking about what we need to do to get our finances in order. Here's a list I may come back to in a while and review. I left out a lot of things that we aren't dealing with (credit card debt, student or car loans, etc.)
- Make a balance sheet - List assets and liabilities to find your net worth. I sat down and did this and the next one right after the lesson on it. It's a good way to see what you have and what you owe, right on paper.
- Make an income statement - Track what happens to your money. I had a bit more problems with this one and am not finished with this one. When I started this in January, I was not really sure how much we spend on certain things, like utilities. I have a better idea now, but we weren't quite tracking out finances greatly until July.
- Develop a budget - We did this in July after our small group did a financial study. I am pretty proud of how our budget works. :P
- A safety deposit box - I worry about fires and natural disasters destroying our place. I would like to get a place to store paperwork and CDs of files - music, photos, etc out of our place. In the same way, we need to get a good filing system figured out. I'd love to get a filing cabinet, but we're not sure where we would put it at this point.
- Mortgage - Someday, whether sooner or later, we will have a mortgage. C is skiddish of making a commitment of that size, and I am too, frankly, but we have a growing down payment fund in the bank, and in the next few years, depending on what the market is doing, we might be set to go for it.
- Life Insurance - C had the option for this at his work, but didn't apply for it when he first started. We need to look at it again, just to be on the safe side. We will especially have to look into this when we have kids.
- Disability Insurance - My textbook repeatedly explained the necessity of this insurance, despite the majority of people not having it. The text basically stated that everyone with anything needs this insurance. If you become disabled, your bills do not stop.
- Renters Insurance - When I looked into renters insurance, I was not able to find any companies that offered coverage in Alaska. I need to look again and see if there is any, because there must be. With rental insurance, you are covered for your stuff and from liability if a disaster is your fault.
- Home inventory - Along those lines, to get good coverage for rental insurance, you need to have an idea of what you have in your home. The solution is to take a home inventory, by taking photos or video of what you have in your home. The text suggested doing one of those two and starting a spreadsheet with price paid, value now, condition, etc. That is one project I really need to work on.
- Car Insurance - We have very basic coverage, but my professor really drove home the need to have more coverage than you think you will need. If you do get sued, the basic coverage won't cover anything.
- Investing - I have been afraid to look this way, especially in this economy, but I have always been intrigued by investing ever since my math teacher in 8th grade had us do a semester long stock tracking project. I also did some of it in my business math class in high school and I like playing with the numbers, even if I don't really understand it! Although, looking into company history is now up my alley of looking into accounting records.
- Retirement - Yikes, I hate thinking about retirement! My professor has been beating this one to death. But it really is important to think about how much money you will need for retirement, especially after taxes and inflation. It's a messy calculation to do on your own with a calculator, but there are several retirement calculators online. Those calculators have a wealth of other ones - mortgages, car payments, etc. It's time for us to start investing now, while we have money to spare. My professor loves to emphasize the time value of money over and over, but it really is amazing to see how a small amount can grow in 40 years. And knowing that Social Security may not be around in 40 years for us to collect from, is more incentive to get this going.
- Estate - It's hard for me to realize that C and I have an estate but we do. We have money in the bank. We have stuff - collectibles, and expensive electronics. Thinking about what to do with it all is a bit overwhelming.
- Will and Executor - We need to sit down and do a will. C will rebel a lot at paying a lawyer I am sure :P Who to have execute our will? It's hard to think about these questions, but I need to do it.
All of these things seem to be needed when they aren't done. I'd encourage my readers to think about what you can do to start ticking these off your lists, because they aren't going away.