Part 3 (1/2)

Net worth = your age times your income, divided by 10

A 40-year-old with a household income of 60,000 should have a net worth of 240,000 And that's just to be what the authors called an ”average accumulator of wealth,” AAW To be what the authors called a PAW, prodigious accumulator of wealth, you'll need twice that much net worth

A basic philosophy is one often attributed to Ao exceeds your income, then your upkeep will be your downfall”

2 Look Back

Now that you've explored your earnings co your spending isn't a substitute for trying to raise your incohted previously, spending is where you have the et a handle on spending is to track it I'et Instead, just track your expenses and categorize the expenses for two months It doesn't matter how you do it You can use pencil and paper, a spreadsheet, or software programs such as Quicken or Microsoft Money You can keep a notepad with you at all ti, or compile store receipts with monthly bills less often If you mostly use debit and credit cards instead of cash, a convenient list of transactions will be on your stateories that fit your spending Atte expenditures, such as food Split it into two subcategories, groceries and dining out

QUICK TIP

Several Web sites now offer to help you track spending A theIt can automatically import transactions from many bank accounts, credit card, and investests vendors that could save you money Similar sites are Wesabecom, Yodleecoorized totals in hand, this is where you face the ugly reality that you spend 534 a e, you spend 156 a month on shoes You're probably already familiar with your once-a-month expenses, such as your electric bill and car payures will be the little money leaks that add up ”Do I really spend 50 a month on bottled water, 40 a month in bank fees, and 60 a month on DVD movies?”

The point is to identify where your money has been misspent in the past so you can redirect it toward your priorities in the future How do you know if it's been misspent? That's the beauty You decide

3 Look Ahead

”Speaking of priorities, how do I get oals

As the saying goes, ”If you ai, you will hit it every tioal properly set is halfway reached” And Benja Jr, said, ”It edy of life does not lie in not reaching your goal The tragedy of life lies in having no goal to reach”

”Yeah, yeah, yeah,” you oals Next chapter, please!”

Before you disoals about ive you direction and can provide peace of mind They even have application in daily life With all theour wants, a set of goals help us to say no They re purchase right in front of us

So, the antidote for leaky, undisciplined spending is having goals

Developing spending goals is not difficult Brainstor, expensive stuff you want to buy and do Write theoals and short-term ones The only rules are that each objective ure and a date for co future chapters, but the following are sooals:Eliet rid of debt so you can stop paying interest But some of the most valuable benefits are nonfinancial-less money stress, a sense of freedonificant other High-interest credit card debt should be an urgent priority Mortgage debt and low-interest student loans are a lower priority to pay off quickly

Build an e a rainy-day fund can be a two-step process The long-teroal is a fund equal to three to sixexpenses, such as food, shelter, and utilities A shorter-terht be to stash away 1,000 or 2,500 Then, it's not a crisis or a time to incur debt when the car needs new tires at the same time the roof needs repairs

Buy a house Be clear about what price you will pay for a house, which lets you estimate an amount for a down payment If you're already a homeowner, perhaps you desire a vacation hoin planning for it

Take a vacation Vacations are optional, but don't totally dismiss the value of shared experiences with family and friends Paid-for vacations are better I recall a Parade e chairs aboard a cruise shi+p Suntan lotion and an uuy turns to his wife and says, ”This would be a lotif we could afford it”

Complete home fix-ups For homeowners, list yourpurchases in priority order

Buy a vehicle You will replace your car or truck It's just aabout the type of vehicle you ive you a a substantial down payhtly used car is a better value than buying new

Retire Past generations often had defined pensions, the kind where they guarantee you a check everyBut, today, it's your job to figure out how to squirrel away hundreds of thousands, and maybe millions, of dollars, before you quit work What type of retireear down your working life? Where will you be living in retiree 70 and being a ho the world? Those plans require vastly different ah scenarios with easy-to-use calculators online at such sites as dinkytownco you'll need Froure: the a each month for the type of retireh ie expenses is a lower priority than e expenses, but nobody lends s plan and start contributing regularly, even if it's only 50 a oal and raise your contributions Few faoals and save 100 percent of college tuition Do what you can Learn ecooals is only the start The rest is follow-through Allocate regular and autooal that needs to be started now We'll talk oal a, break it down further For exaency fund Instead, you're saving 685 per day for a year Opening separate fee-free savings accounts for sooals, such as a car fund, can help ioal Set up an autooal Yourlower-priority goals until ones that are more important-or more immediate-are either under way or coress toward achieving the goals, regularly revising both the dollar figures-upward, we hope-and time frames-sooner, we hope

Then, next time you're tempted with an impulse purchase, you'll have a reason to say no That's funda

nobody wants to consider their own de an adult

Estate Planning, 1-2-3

Make an appoint attorney to draw up or update the following documents: 1 Will