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Financial Road Trip


As the school year ends and families gear up for summer vacations, many are planning to take a road trip. Whether it is to visit relatives, national parks, or popular amusement destinations, these trips need to be planned out in detail so that the destination can be reached with as few bumps in the road as possible. Your finances can be viewed in the same manner. Your goals represent your destination. What is the process you need to take in order to get there? This month, Apprisen offers you a map to guide you on your financial road trip. 

Is Your Car Ready?

Before hitting the road you need to make an assessment of your car’s condition and take care of some maintenance issues. The same goes with your finances. What financial shape are you in? Be realistic - is your current state going to allow you to reach your final destination or do you need to make some adjustments first? Begin by adding up all of your debt – credit cards, car loans, student loans, mortgage, etc. Next, add up your equity in your home, savings, investments, and retirement. Subtract the total of your debt from this number and that is your net worth. Is it what you think it should be?  If it is, great!  Your plan might not need many modifications. If it is not, then some repairs need to be made.

It is not safe to assume you know what is wrong with your car; you need to get under the hood to get a clear understanding. Think of handling your money the same way. You need to review where you are spending your money before you know where the problems are. Start by tracking your expenses for thirty days. This will give you a good idea where your spending is out of alignment with your income. Create a spending plan where every dollar that comes into your household is allotted towards an expense. If you have too many expenses to fit your income, there are only two things you can do – increase your income or decrease your expenses. Give yourself a financial tune-up to help get you on the road to your final destination. 

Setting Your GPS

In the “olden days” when you were planning a trip you pulled out maps and would highlight your route in red. However, today it’s so much easier to set your GPS and go. But that doesn’t mean you still don’t need to have a plan. You know where you are headed, but there are things you need to think about while you are getting there. For example, what are the costs associated with the trip?  You need to have a plan in place on how much you are going to spend on gas, food, lodging and entertainment, just like your everyday life. By having a spending plan, you know how much you can spend on each expense to ensure all your needs are being met.


Hit the Road

You’re ready to go. The maintenance on the car is done, your GPS is set and everyone is excited about getting on the road. But, it is important to remember to keep track of your expenses along the way. It is so easy to swipe that debt or credit card and not realize how much you are spending. At the end of each day, pull out your receipts, add them up, and keep a running total in each spending category. For example, if you find that gas prices were higher than you expected and you are spending more than you anticipated, you might need to cut back on your food expenses. This is the same routine you need to be doing throughout the month to make sure you are staying within your spending limits. It will keep you on track and allow you to make changes to your spending behaviors when needed.


Uh Oh!

Your trip has been perfect so far. You are maintaining your expenses and making adjustments when necessary, when all of a sudden you get a flat tire. You definitely didn’t count on that but, hopefully, you knew something like that could happen and planned for it. An emergency savings account is necessary for when “life happens.” Be realistic about the amount you are putting in the account. You are not saving if you save $50 in from every paycheck and then take $45 out to cover your monthly expenses. You will be better off to put $5 in and leave it there than continually withdrawing from the account.  Small amounts add up over time.


You Have Arrived!

You may have reached your destination, but you are far from being finished making decisions. You still have activities that you want to do, food and lodging expenses, and your trip back home. As with many trips, things may not have occurred the way that you intended and you had to make changes to your plans. That’s life. Continue to set new goals, make adjustments when needed, and let your financial road trip take you to new and exciting places.    

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