Taking Your Personal Financial Inventory (483 words)
There’s an old joke about a guy on his hands and knees looking for some lost money on the street one night. A cop pulls up and asks the man what he’s doing.
“I’m looking for twenty dollars I lost on Mulberry Street,” the gent responds.
“But this is Maple Street,” the cop answers.
“I know,” says the man, still crawling along the pavement. “But the lighting’s better here.”
When it comes to managing our own money, many of us act like the guy who lost his money on Mulberry Street. We try to take the easy way out, common sense be damned. Whether it’s the loudmouth day trader bragging about his big score that day, but who can’t balance his checkbook, or the whack job down the block who stuffs his savings into a mattress “because it’s a well-known fact that Martians actually run the banking industry,” some people seem unable or unwilling to take the time to manage their money correctly.
Are you serious about taking control of your financial life? You see, it’s no secret that paying closer attention to your personal financial situation will not only make it much easier to build your own supernova mutual fund, it is also one of the smartest moves you’ll ever make. Sure, you might check your mutual fund every day, and you’re always on the lookout for the next hot stock, but that’s not what we’re talking about – at least not yet, anyway.
No, in financial investing, as in most other instances in life, you have to walk before you can run. That’s why knowing the financial basics – things like knowing your net worth, crafting a household budget, understanding the machinations behind credit and debt, and the importance of paying yourself first – are so important. These – and not the next biotechnology stock supernova – are the cornerstones of your own wildly successful mutual fund. Knowing the financial basics not only will give you a significantly greater sense of security, it will also give you a nice launching pad to dive into the fun stuff later on when you begin to build your own mutual fund. You know, things like picking off points on the NASDAQ market or buying Portuguese debentures on your laptop at 2 a.m. in your underwear.
Unfortunately, most people address their financial planning in ambiguous terms. They want their money to grow, and may measure performance against the stock market, but they don’t look at what they really need to have happen. What’s more, they don’t consider the effects of spending and borrowing in concert with the positives of saving and investing.
So, in the spirit of that “walk first, run second” mantra I’ve been yammering away about, before you can strap on your mutual fund building boots it’s imperative that you have your everyday financial life in order. Here’s where to start.
Darius Harris is the author of http://eforexsignaling.com and http://indexbinaryoptions.com and has written over 1000 articles on the pros and cons of online day and forex trading and the ways to stack the odds in your favor when investing..