You can do it. You can kick start your finances and achieve your goals and dreams.
I remember things in a blur when I had a huge student loan... I had the impression that I would always have that debt and would never be able to pay it completely. I thought back then that my finances were not that bad but I knew I had little clarity about what I spend on a monthly basis and did not budget nor track my expenses. My fear then was that at some point, I would get in trouble.
Luckily, a friend of mine invited me to attend a Road to Riches workshop. When I read this friend's email, it reminded me that as a little girl I always thought of being rich and at some point in life, reality kicked in and I never really thought seriously about that again.
It was interesting because as I attended the session, I ended up signing up for their whole program, because at the end of that first meeting, I really could see a system, I could see myself succeeding and in control of my financial success. Back then, they did not get into the Net Worth I mentioned in the previous blog. But they did talk about objectives, financial intended outcomes I'd like to realize within a certain time and they walked me through a process to not only think through what actions I could take, but also what would stop me. That was a very powerful process and it just took a few minutes in a conversation. But those few minutes changed my life forever.
I never thought I'd have a personal budget. I never thought I'd track my expenses to compare with my budget. I did not even think of a personal balance sheet or net worth. But all those tools became second nature to me. I keep track of my finances by spending 15 to 30 min weekly... It used to take me hours to do that... Practice makes it perfect... well, not quite perfect but pretty good!
But the best part is that everytime I set up an intended outcome, I can go through that exercise... What is it that I want to accomplish? How can I measure it? Get specific. Pin point a number. By when? When would I like to have it? Then, the question we never dwell on... what would stop me?
At that moment at the end of the meeting, I kick started my finances and all of a sudden I could see that I could achieve dreams I have given up on. I can achieve all my goals and dreams. And so can you. What do you want to accomplish? How can you measure it? What is the measure? What could stop you?
By the way, I have paid off 100% of my student loans way in advance.
Friday, June 27, 2008
Saturday, June 21, 2008
Kick Start Your Finances
In order to kick start your finances and plan your financial future effectively, the first step is to find out where you stand today. Accurate and efficient "measuring" is essential to long-term success.
But what does it mean "to know where you are" when we are talking about personal finances?
There is one important tool that help us figure that out: the personal Balance Sheet or Net Worth Statement. This is a tool that is also important to have if you’re seeking a loan or trying to make a major financial decision. The “net worth” is the clearest indicator of your financial condition at any given point.
The Balance Sheet or Net Worth form helps you identify and calculate all your assets and liabilities to determine your net worth. It is a great tool to see if you are on the path to meeting your desired financial outcomes. The Balance Sheet or Net Worth statement is completed as of a point in time, and reflects the person’s or company’s position at that moment.
• The Balance Sheet, or Net Worth statement, is a tool to accurately calculate your financial worth – the value of what you own minus what you owe – and gain a clearer understanding of your financial situation.
Your net worth is the difference between all the things of value that you own (your assets) minus all the debts you owe (your liabilities).
• If you have more assets than liabilities, you have a positive net worth, which is a good thing...
• If you have more liabilities than assets, you have a negative net worth. At this particular point in time, you owe more than you have. This is not such a good thing, but it's information you need to know so you can take appropriate actions to change it.
What are typical assets?
Short term assets: cash, balance on your checking account, savings, brokerage accounts, investments such as stocks, options, etc.
Long term assets: value of personal property and investments such as houses, jewelry, art and antiques, bonds, partnerships, pension funds, IRA, 401k, etc.
What are typical liabilities?
Short-term include all your current bills, rent, medical, dental, utilities, credit cards and any personal, furniture and car loans, taxes, etc.
Long term loans may include loans against stocks, bonds, mortgage debt, home equity loan and any other loans for vacation homes, boats etc.
Why is it important to "know where you are financially"?
When you go on a journey, you need to know where you are and your destination to define which path to take. You can take the highway, the scenic route but ultimately, you need to know beginning and end points to get started.
Sometimes, people are so scared to see how much they owe or how much they are spending that they get stopped. A couple of times, it will take courage to start, but when you are done, you will feel better. Whatever your financial situation is, it is what it is... It is a fact, it does not mean anything about you, if you are a good person, successful or not. It is a snapshot of your financial situation. I've seen people get relieved after the first time they did their net worth because the situation was not as bad as they thought. In other cases, it was bad, but people got empowered because they took the first step in taking charge of their financial future. Either way, the net worth will provide you a snapshot of the consequences of your choices to date.
Once you have the net worth, starting defining what you want it to look like int he future and what actions you can start taking to get there. In some cases, it will involve adjusting your life style so you can save more, in others it may involve investing your money better. So go, ahead, organize your records and get started.
But what does it mean "to know where you are" when we are talking about personal finances?
There is one important tool that help us figure that out: the personal Balance Sheet or Net Worth Statement. This is a tool that is also important to have if you’re seeking a loan or trying to make a major financial decision. The “net worth” is the clearest indicator of your financial condition at any given point.
The Balance Sheet or Net Worth form helps you identify and calculate all your assets and liabilities to determine your net worth. It is a great tool to see if you are on the path to meeting your desired financial outcomes. The Balance Sheet or Net Worth statement is completed as of a point in time, and reflects the person’s or company’s position at that moment.
• The Balance Sheet, or Net Worth statement, is a tool to accurately calculate your financial worth – the value of what you own minus what you owe – and gain a clearer understanding of your financial situation.
Your net worth is the difference between all the things of value that you own (your assets) minus all the debts you owe (your liabilities).
• If you have more assets than liabilities, you have a positive net worth, which is a good thing...
• If you have more liabilities than assets, you have a negative net worth. At this particular point in time, you owe more than you have. This is not such a good thing, but it's information you need to know so you can take appropriate actions to change it.
What are typical assets?
Short term assets: cash, balance on your checking account, savings, brokerage accounts, investments such as stocks, options, etc.
Long term assets: value of personal property and investments such as houses, jewelry, art and antiques, bonds, partnerships, pension funds, IRA, 401k, etc.
What are typical liabilities?
Short-term include all your current bills, rent, medical, dental, utilities, credit cards and any personal, furniture and car loans, taxes, etc.
Long term loans may include loans against stocks, bonds, mortgage debt, home equity loan and any other loans for vacation homes, boats etc.
Why is it important to "know where you are financially"?
When you go on a journey, you need to know where you are and your destination to define which path to take. You can take the highway, the scenic route but ultimately, you need to know beginning and end points to get started.
Sometimes, people are so scared to see how much they owe or how much they are spending that they get stopped. A couple of times, it will take courage to start, but when you are done, you will feel better. Whatever your financial situation is, it is what it is... It is a fact, it does not mean anything about you, if you are a good person, successful or not. It is a snapshot of your financial situation. I've seen people get relieved after the first time they did their net worth because the situation was not as bad as they thought. In other cases, it was bad, but people got empowered because they took the first step in taking charge of their financial future. Either way, the net worth will provide you a snapshot of the consequences of your choices to date.
Once you have the net worth, starting defining what you want it to look like int he future and what actions you can start taking to get there. In some cases, it will involve adjusting your life style so you can save more, in others it may involve investing your money better. So go, ahead, organize your records and get started.
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