Financial Planning For The New Year - Brief Article

THE New Year is here, and if you didn't pay cash for those holiday presents or millennium bashes, then the year-end bills are undoubtedly beginning to pile up. Indeed, African-Americans spent $441 billion in 1998, and with a strong economy, that figure will surely rise.

But financial experts say attaining economic power is about more than spending. It's about saving and investing not only in your future, but in the future of this nation.

"We celebrate this [$440 billion] in consumer income," says Brooke Stephens, an author and financial advisor from New York, "but we're not trying to learn how to use the money better."

If you plan, if you set aside money for retirement or for your child's education, then you're laying a foundation for financial success. If you don't plan, then you may help perpetuate a cycle of economic disadvantage, says Pamela Ayo Yetunde, a financial consultant in San Francisco.

It's time to break that cycle and build a plan for the New Year that will help you take control of your financial future.

"The major first step would be understanding that nothing stays the same forever as it relates to your money. The federal government will never pay you enough to live on in retirement," says Yetunde, author of Beyond 40 Acres and Another Pair of Shoes: For Smart Sisters Who Think Too Much and Do Too Little About Their Money. "Like anything else in life, if you make a plan and you follow certain steps, you'll achieve it."

From balance sheets and ledger books to punching up money matters on your computer, a sound financial plan lets you know what's going on with your finances.

Break The Code Of Silence

Often we allow our ignorance about a subject to keep us from learning more. The same can hold true about investing and saving. It's a good idea to talk with others and research what you should do with your money. Go to the public library and read investment books, magazines and newspapers. Watch the news to see the daily financial report and pay attention to the health of the economy. Pass on good money habits to young people and share your knowledge. When you make the commitment to learn, it's easier to follow through.

"The most important point is stop thinking so much and actually do something," says Stephens, author of Wealth Happens One Day at a Time: 365 Days to a Brighter Financial Future. "When it comes to money, you have got to make the effort to learn this on your own."

Set Goals

Whether you want to buy a new house or invest $2,000 in the stock market, setting goals and writing them down is a good way to fruitful financial planning. Figure out how much extra money you have to spend after you've paid all your bills, then consult a financial planner to find out how to achieve your goals. Think about where you want to be a year from now and work toward meeting that end.

Get (And Stay) Organized

Some of the most successful people keep thorough financial records, experts say. Using your checkbook, credit card receipts and bank statements, list all income and expenses from the past year to determine expenses for the new year. You can do this by taking your expenses and income for a three-month period and multiply it by four.

Determine what you can reasonably afford to spend for the month and track how well you're doing by entering the actual and projected expenses on a budget or balance sheet or in a financial software program on your computer. When preparing and following a budget, be realistic and write down everything you spend. Once you're organized, you may find other savings and ways to cut expenses.

Save And Invest Whenever Possible

Try to put away about 10 to 20 percent of your take-home pay for savings or investing. Having extra money gives you more wiggle room in your financial plan and more control over your financial life. If your employer has direct deposit, it may be easier to set aside a portion of each paycheck. Once you've got a nest egg, you can pursue investment opportunities. For example, Yetunde says, a good mutual fund usually requires between $500 and $1,000 to start and then additional monthly payments of about $50 to $100.

The best investment years are when you're 20 to 50 years old, Stephens says, and with the stock market riding high, you shouldn't delay. A 20-year-old starting out investing $20 a week can have $1 million at retirement. If you wait until you're 30, it'll take $55 a week.

"That's our mistake. You can never pick the right moment to get into the stock market," says Stephens, who also wrote Talking Money and Making Sense: A Wealth Building Guide for African-Americans. "You've got to look at it as a long-term commitment."

We Deserve More Money

African-Americans are entitled to the riches this country has to offer, says Yetunde, a graduate of the Indiana University School of Law-Bloomington. "We need to realize that we have a stake in the United States as an economic power," she says. "It's more about being an American than anything else."