Financial Check-Up
Do you know your worth? Know, Grow, and Maintain it.
Right now, you are probably thinking about your worth as a living, breathing, and awesome human being. So, you will respond, “Of course, I do. My worth is priceless”. You would be correct. YOU are indeed PRICELESS.
Fortunately, that’s not the “worth” I am referring to right now.
Have you ever wondered why (not how) the rich stay rich? How did their ideas grow from mere concepts to big multi-million dollar empires?
I am going to give you a hint. Royalty, celebrities, entrepreneurs, and businesses have in common and consider being of significant importance.
If you guessed “Net” worth, then you have guessed correctly. Royalty, celebrities, and entrepreneurs focus on achieving and maintaining a high or increasing net worth. We would like to believe that net worth is a common thing known to all. But, that is not the case … at all. Unfortunately, too many “average” people have no clue what net worth is or how to calculate it. Even worse, they have no understanding of their net worth. This is because, immediately, when we start looking at our financials, we focus on the money that comes in and rarely focus on the money that goes out. Some of us believe that we know what we are doing because we have a budget. Sorry to break the news to you. When you assess your most current financial situation, a “budget” is only the meat in your gumbo — a lot of the sustenance is missing. Yes, budgeting will allow you to determine how much of your money should go out from what comes in. If your budget management activities are efficient, you will begin to notice that you have some money left over. This is your cash flow. Cash flow is a term that big businesses use and respect because cash is king. It helps you achieve personal and professional goals. A budget will get you off to a great start in creating, rebuilding, or revamping your current financial situation. We will explore this topic in-depth later. However, the fact remains, that a budget only covers cash flow monthly. What about the rest of the year? Or throughout a lifetime? Royalty, celebrities, entrepreneurs, and business owners know that to grow a financially stable empire, you must know your financial health as it is. They search for and monitor the complete financial picture. They all use a financial report referred to as a balance sheet. But, we will refer to it as the personal financial statement.
Personal financial statements are used in a variety of situations, the most common being retirement planning. It analyzes all assets, liabilities, income, spending, and more. Your net worth, reflected in your financial statement, is the difference between all of your assets combined (ex. cash, investments, real estate, etc.) and all of your liabilities combined (ex. credit card debt, student loan debt, mortgage debt, etc.). The resulting number is where you stand right now — at this point, financially. It is your net worth. Changes in your income activities and spending activities will impact your net worth in either a positive or negative way at any given point in time. Knowing this number, along with sticking to your budget, will help you make better financial decisions. It will get you closer to building a nice little nest egg and legacy to leave with your loved ones.
If you were not familiar with this information before reading this piece, have never done anything to assess your financial situation, and now you want to change that — continue reading. I have some tools you could benefit from.
If you were already familiar with this information, executed a financial plan, and still decided to continue reading. This is because you found it interesting. I would like to thank you for staying tuned in. Please do continue reading, though. There is more to come. Perhaps you too will learn something new.
There are several ways to get started in determining your net worth and overall financial situation (aka financial health).
You can do a Google Search. I just entered “personal financial statement” into the search bar. The two top links that I found the most appropriate were a personal financial statement in Excel and a blank PDF version.
Blank Personal Financial Statement (PDF)
http//www.hrdc.org/Websites/hrdc/images/Personal_Financial_Statement.pdf
Personal Financial Statement in Excel
treasury.tn.gov/smob/Documents/PersonalFinancialstatement.xls
Once you have printed out the copies, input the information. Then, perform the simple addition and subtraction calculations to get your net worth. Yay, you did it. How does it feel? Empowering, right? Was it easy? Was it difficult? Perhaps, a little time-consuming? In any regard, it was worth it. Now, start earning more income, managing those expenses, make a few investments, and watch that thang grow.
Disclaimer 1#. Please do allow me to be honest. I DO NOT use any of these. I, myself, do not like manual inputs. I use a financial software and wealth management tool from a company called Personal Capital. This tool is accessible via online, on Google Play, and the App Store. The best part, IT IS FREE. This free financial software helps you to manage your entire financial portfolio. This includes your bank accounts, investment accounts, credit card accounts, loan accounts, and any other thing that has value. All you have to do is set it up once, and your financial life will be secured in one place. The software also helps you to develop a long-term financial strategy. Your net worth, budget, investments, and retirement plan are viewable and analyzed to help you achieve your financial goals faster, easier, and a little more stress-free. This is a great alternative to manually writing it out every month, quarter, or year. I have been using this resource for a couple of years now. It has become so much a part of my money routine that I barely need to log in to check my financial accounts individually. Now I simply log in to one software account. Once logged in, I need to know about my financial health situation is right there. Net worth and all!
Check it out here. https//www.personalcapital.com/
Disclaimer #2. I am not a representative of Personal Capital. I do not get paid for promoting them. I am simply a satisfied user of the software. You are free to use any of the three resources I provided to work on your financial statement and determine your net worth as you see fit and in terms of comfortability. No matter which you choose, just get it done.
