Getting on the road toward financial freedom: there are several basic steps that anyone can take to reach economic empowerment. Here are three of them

Black Enterprise, Oct, 2004 by Lynnette Khalfani

CREATING AN EFFECTIVE FILING SYSTEM

To make an effective filing system, experts recommend alphabetizing your relevant documents by subject or category. But don't make the mistake of having too many or too few categories. A dozen broad categories should be the maximum in any filing system, Schechter says. Therefore, a sample file index might include categories for:

* Banking records (including checking and savings accounts)

* Bills paid (where you file regular monthly expenses)

* Budget (for itemized listings of all your expenses, income, and assets)

* Mortgage

* Receipts

* Credit cards (useful for storing receipts, statements, and contracts)

* Insurance (auto, health, life, and property insurance records)

* Investments (such as 401(k) and mutual fund reports)

* Taxes

BASIC STEP [NO. 2] CREATE SMART FINANCIAL GOALS

SMART is an abbreviation for goats that are Specified, Measurable, Action-oriented, Realistic, and Time-bound. The idea is to avoid general, vague, or hazy goals such [as] "I want to be rich." Exactly what does "rich" mean to you? Is it having $100,000, or $1 million in the bank? And what's your timetable dan/or deadline?

THE IMPORTANCE OF WRITTEN GOALS

You must have precise, written goals--not ideas in your head. If you can't come up with your own written goals and the plan that will get you there, find a local financial planner for help. You can contact one in your area through the Financial Planning Association at 800-647-6340 or www.fpanet.net. Another place to find a fee-only financial adviser is the National Association of Personal Financial Advisors at www.napfa.org or 800-366-2732. Finally, many accountants also offer financial planning services. To find one, contact the American Institute of Certified Public Accountants: www.aicpa.org or 212-596-6200.

In my first book, Investing Success: How to Conquer 30 Costly Mistakes & Multiply Your Wealth! (Advantage World Press; $24.95), I told readers about the importance of having SMART goals. I also explained that people who set written goals overwhelmingly fare better than those who do not.

CONSIDER YOUR SHORT-, MEDIUM-, AND LONG-RANGE GOALS

I'd like to guide your thinking now toward short-term, medium-range, and long-term goals that you may want to pursue. Short-term goals are those you can accomplish in one or two years at most. Medium-range goals will take two to 10 years to achieve. And long term goals require you to save or invest for a decade or longer.

Here are some goals to which you might aspire:

* Paying off student loans

* Eliminating credit card debt

* Building up an emergency cash cushion

* Buying a new car or a second automobile

* Starting a business

* Saving for a downpayment on a house

* Investing in the stock market or in real estate

* Retiring comfortably

YOUR RETIREMENT ASPIRATIONS

Financial advisers say one of the most frequently asked questions from their clients is: Am I financially prepared for retirement? Yet far fewer people take time to ponder another, equally pressing query: Am I emotionally ready to retire?