This is just the tip of the iceberg on financial planning principles. Check out the free home finance and budget forms. Look at the Short Range Planning Form, it is a good place to start. This would be for a 0-3 year look ahead on your financial needs, and would include saving for things like vacations, new cars, appliances, home maintenance (roofs, carpets, remodels, and for me specifically - a heat pump!) and other costs that you know will hit soon. Another good form to use is the Debt Repayment Plan, also known as the 'snowball plan.' You pay off the small or high interest debts first, taking the monthly payment that would have gone to them and putting it into repaying the next debt, and so on. There is also a useful budget and savings plan in the money section.
Short-term needs are easy to ignore, but these are the chickens that come home to roost, so to speak, and they will come home! The tires will wear out, the roof will leak, the kids will go to college, I can't work forever, and so on. So, if that is reality, accept it, and start saving for future needs now. Failure to plan can mean more debt and interest payments, and less prosperity as a result of more interest losses.
OK, a personal goof up on lack of planning and preparedness: We were going to take a trip from the Tri-Cities Washington to Tacoma, about 225 miles. I knew that the station wagons water pump seemed to be wobbling. I should have taken it in and have it fixed in preparation for the trip, but waited too long. Then, as the day approached I simply said to myself "it will make it!" My trusting wife and kids were counting on me to do my job, but I flunked. So, we left home, and about 1 hour out I heard some noises, looked at the pump and, yes, it was vibrating even more. Should have fixed it there, in the remote town of Mattawa. No way this stubborn man was going to stop there. We did make all the way to Tacoma, where I looked at it again, but just got emboldened. On the way home, in the middle of the desert about 10 miles outside of Ellensburg, in 100F heat without water, the water pump blew apart. I stopped the car. The air reeked of antifreeze and I looked underneath just in time to see ball bearings from the water pump falling onto the asphalt! We were stuck there for hours until help arrived. It was humbling, but I vowed never to do that to my family again, and do my best to be prepared - like the Boy Scout I was at one time. So, now I try to think ahead and not live on the edge of catastrophe, because I love my family!
Planning invades our everyday life. It's a necessary part of a successful future. Apple orchards began with someone counting the cost (work, money, loans, seedlings, irrigation, fertilizer, farm equipment etc). Someone had to conceive and consider where, when, why, how much, etc. But, they did it, and you can to. Then they get to reap a harvest from what was sown some time ago, and it is much more than the seedlings!
Life is a journey, like a ship going from one place to another. The trip takes preparation and teamwork. You need a reliable ship and crew, food, fuel, clothing, money, lifeboats, and a route and much more.
One of the best parts of planning is that since you've done your part, then there is a much better prospect for success. And so, "don't worry" and reap the harvest of good planning.
“Helping People in the First and Third Worlds With God’s Love, As Manifested Through Microbusinesses”
PLANNING EXAMPLE
SHORT-TERM SAVINGS FOR ANTICIPATED NEEDS
This is a savings plan - saving a little each month for expenses that we know arise periodically. The principle is to consider what you've spent in the past, and save in anticpation of a recurrence. Expenses such as medical, dental, clothing, home maintenance, taxes, car maintenance are examples of expenses that arise with little warning but can be anticipated. Plans can also be made for known future expenses such as college education, birthday and Christmas gifts, vacations, and other future needs or wants. It's better to tell ourselves the truth about costs that always hit, rather than ignoring them and paying out of savings later on, or worse yet, going into debt for lack of planning.
SAVINGS GOALS - $ Per Month and $ Per Year:
Clothing Insurance Medical
Monthly: $50$100$100
Annual $600 $1,200 $1200
LOGSHEET 2006
Clothing Insurance Medical Comment
Jan 50 450600 Balance from last year.
Feb 100550700
Mar 150650800
Apr 200750900
May2508501000
Jun 300 0 1100 $350 house, $500 car insurance
Jul 3501001200
Aug 400 2001300
Sep 0 3001400 $400 to school clothes
Oct 50 4001500
Nov 1005001600
Dec 6506001200$500 medical for clothes
LOGSHEET 2007
Jan 700 700 1300 Balance from last year
Feb
Mar
You can save up this year for next years needs. Goes against the grain, doesn't it...seems unnatural. For many people, it is an alien concept!
