Turn On Your Financial RADAR

By Pinyo, on May 4, 2009

One of the first things you must do on your journey toward achieving financial success is to turn on your Financial RADAR. Similar to a real radar, which allows you to detect objects and safely navigate through hazards, your Financial RADAR allows you to understand where you are today and navigate your way toward financial success in the future.

Photo by BenFrantzDale via Flickr

What Is Financial RADAR?

Well, exactly what is Financial RADAR? RADAR is an acronym to help you remember the steps for assessing your current financial health and getting you closer toward your goals.

Recognition

First is recognition, or understanding where you are standing financially. Here is a checklist to help you assess various aspects of your life, which will help you start thinking about your finances.

• Are you spending more than you earn?
• Are you in debt?
• Do you know what you need to save for retirement? What have you done so far?
• Are you working toward any financial goal? Why or why not?

Acceptance

Second is to accept your current situation and persuade yourself that you can make things better. Some people recognize exactly what’s going on with their finances, but choose to respond with denial. Unfortunately, denial is not going make the problem go away or help you archive financial success.

Desire

Third is to have the desire to make changes so that you can correct problems and make things better. This is the step where you start putting together some SMART financial goals. These goals will act as your guiding posts so that you can see where you want to go.

Actions

Once your goals are set, the next step is to take actions toward achieving them. What you need to do may not be obvious at first; however, there is a process to help you identify actions to achieve your goals. The end result of this step is a list of tasks (e.g., things to do) that will move you closer toward achieving your goals.

Result Tracking

Believe it or not, things tend to get better when you pay close attention and track the progress. If you want to spend less, track your spending. If you want to get out of debt, keep track of how much you owe and what you’re able to pay down each month. If you want to become rich, keep track of your net worth. You get the idea.

The act of tracking your progress forces you to see where you are. Second, it makes you think about how you can get to where you want to be faster. And third, it helps you distinguish wishful thinking from reality — for example, you cannot pay off $1,200 debt in 1 year if you’re only paying $50 a month.

Have you turned on your Financial RADAR yet? If not, what are you waiting for?

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Pinyo is the brain behind Moolanomy personal finance blog and a few other web sites. If you like this article, please subscribe for free daily email updates.

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