Not your worth as a human being, you are SO much more than the dollar signs next to your name. BUT let’s not discount the importance of understanding those dollar signs and what they represent as it relates to your financial wellness.
So you can fully grasp where you stand financially when you take into consideration everything you own vs. everything you owe. Your net worth is the number that matters most. Not what’s in your bank account or your salary or even the value of your home. Your net worth is the leading indicator of your overall financial health.
Life happens, we get older and our lives get more complex as we take on higher paying jobs, buy homes or investment properties, we get married and start co-mingling accounts. Often times we lose sight of where we stand financially. Life gets busy, money is coming in and going out and so long as we can pay for the things we want – then that’s good enough for right now.
We lose sight of all the moving pieces in our financial lives because there is just so much to keep track of that the task to organize it all seems too daunting. Or perhaps worse, you may not want to organize it all because you don’t want to come to grips with the reality of the outcome.
But if that’s the case and we aren’t fully in tune with our full financial position – how will we ever move forward or change the direction in which we are going if we have no idea where we stand today?
Bringing awareness to your financial picture with a snapshot of all your assets and liabilities is not only nice to see, but it’s helpful in determining where you want to go next. And here’s to hoping that it will give you some motivation and perspective on how best to get there.
Assets represent what you own. Examples would be your checking accounts, savings accounts, your home, a vehicle you own, your personal property like jewelry and household items, etc.
Liabilities represent what you owe. Examples would be your credit card balances, your mortgage or a vehicle loan.
The minimum goal when evaluating your net worth is to simply have this number be positive. If your net worth is negative and what you owe exceeds what you own then consistency, discipline and commitment to a savings/debt pay down strategy are going to be your new bffs.
Sure, part of the thrill of understanding my net worth is due to the fact that I may or may not have an obsession with knowing what I own, where it is held and how it is holding up for me. But this passion and excitement for building my financial empire is something I want to share with you in the hopes that you too may become a tad bit excited about the financial path you are on.
I have created a simple and straight forward net worth template that can be used as a guide for you to put all your assets and liabilities together and track their values over time. If this template doesn’t mesh well with you or you prefer a different tracking system – fantastic – all good. But please start tracking your net worth by compiling your assets and your liabilities in a manner that helps you create a visual of your net worth and all its moving pieces.
If you notice that your net worth figure is going down consistently – then maybe this is the reality check you needed to understand that you are either living paycheck to paycheck or living beyond your means. Or if you notice that your credit card bills are consistently getting higher each month – then maybe this is the gentle punch to the gut that you needed to realize your spending is starting to creep in the wrong direction. Allow this 15 minute monthly exercise to bring awareness to your spending and saving month over month and how it impacts your bottom line.
This should be a “fun” exercise, not a homework assignment. You aren’t creating a template for your boss or your client….this is for YOU, your money and your future. Take ownership of it!
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