Starting a Serious Financial Plan

One thing is for certain: we already know that you will need investment income to see you through your retirement years. And the amounts you have in your investments may be needed for other goals such as educating children or purchasing a home. But, how much should you put towards your investment goals, where should the investments be made, how do you get started on your lifetime financial plan?

Got your motivations list in front of you? Let’s start with some basics about financial planning. Let’s start with where you are now – financially. To figure that out, you need to organize your paperwork. I know, this is something no one enjoys doing. But, it absolutely is the first step towards taking control of your financial situation. You have to know where you are to get to where you want to be. So, get to the local office supply store and buy some manila file folders – lots of them. I like the ones that look like pockets, since paper tends to fall out and get lost in loose file folders. Or, you can do this with folders on your computer, too. You just have to be able to scan or keep track of your electronic receipts.


Got the manila files? OK, let’s get to it. Make the following labels on the files:

-“Pay Stubs”
-“Bank Account Statements”
-“401(k) Plan statements”
-“Brokerage Statements”- if you have more than one brokerage account, make a separate file for each one
-“Insurance” – put it all in this files – home, auto, life, and disability
-“Home Maintenance” – this file is for repairs, appliances
-“Mortgage Payments”
-“Property Taxes”
-“Car Payments” – this file is for expenses, whether car loans or lease payments
-“Credit Card/Loan Payments” – if you have more than one credit card or loan, make a separate file for each one
-“Child Care Expenses”
-“Entertainment” – this is tricky file since it is difficult to estimate your expenditures if you entertain friends in your home. But, insert your receipts for food and beverages for guests every time you entertain. Also add tickets stubs, magazine subscriptions, rental movie stubs and anything else relating to your own entertainment. You will probably be surprised at your monthly expenditures on this category.
-“Medical/Dental/Vision/Prescription Drug Expenses” – This is for unreimbursed medical expenses-those your insurance company doesn’t cover.
-“Food” – this is for normal food expenditures for your family, and should not include food expenditures related to entertaining guests.
-“College Education Expenses” – including tuition, books, car insurance, health insurance, apartment rental, anything you are spending for the child at college.
-“Income Taxes”
-“Utility Payments”- gas/oil, water, electric, water, sewer
-“Telephone Payments”- home, cell
-“TV/Internet” – use this one if you have cable, satellite, etc.

Take all the receipts you have and sort them into each one of these file folders.

Make a sheet of paper for each folder. On the sheet, put down the average amount of money you spend on a monthly basis. Just take 12 months receipts, add them up and divide by 12 to get your monthly average expenditure for the item. Staple your tally page to the top of the folder so you can refer to it later.

You don’t have to file every bill away in a folder every time you pay it. Instead, one good method is to keep a “current receipts” envelope (a large one) into which you put every receipt, pay stub and invoice stub you have every month. Once a month, clean out the envelope and put all receipts into their proper folders. Check and revise your tally sheets on top of the folders. If you see that you are continually spending money for something for which you don’t have a file folder, make a new one.

Keep your tally sheets on top of the folders up to date. That way, you will always be current and will always know by referring to each folder what you are spending or taking into income for each category.

Make sure your filing system works for you. If you have a better way of approaching your bills, do it. But, create something so comfortable for you that you will stick with it. Just by sorting your monthly expenditures, you have taken more control over your finances.

Now, start to analyze what you have.

About the Author: Lyn Striegel is an attorney in private practice in Chesapeake Beach and Annapolis. Lyn has over thirty years experience in the fields of estate and financial planning and is the author of “Live Secure: Estate and Financial Planning for Women and the Men Who Love Them (2011 ed.).” Nothing in this article constitutes specific legal or financial advice and readers are advised to consult their own counsel.