Give Yourself A Financial Check-Up
Give Yourself A Financial Check-Up
Most people prefer to keep their head in the sand… sadly until it’s too late. If you’re genuinely serious about your financial future then it’s time to pluck up the courage to give yourself a financial check-up. It can be a little daunting but finding where you are now is a key step in becoming financially fit.
To find your financial baseline, we’re going to look at your net worth.
You will have already been working for a number of years and your net worth is what you have to show for the income that has passed through your hands.
The formula is pretty simple – your net worth is essentially the value of everything you own, minus the value of everything you owe.
Net Worth = Your Assets – Your Debts
Grab a piece of paper and jot down your assets and your debts in two columns like below, then add up each column and subtract what you owe from what you own.
| ASSETS | DEBTS | ||
| Home | $ | Mortgages/s | $ |
| Inv. property/land | $ | Inv. Property loan | $ |
| Superannuation | $ | Personal loan/s | $ |
| Managed funds | $ | Car loan/s | $ |
| Shares | $ | Investment loan/s | $ |
| Other investments | $ | HECS | $ |
| Savings | $ | Credit card/s | $ |
| Value of business | $ | Business loan | $ |
| Car/boat/caravan | $ | Afterpay etc. | $ |
| Other assets | $ | Other debts | $ |
| TOTAL ASSETS | $ | TOTAL DEBTS | $ |
NET WORTH = TOTAL ASSETS – TOTAL DEBTS = $____________________________
OK, you now have your financial baseline. How does it look? Are you happy with the results?
Before you answer that, I want you to do one more calculation….
NET WORTH – HOME – CAR = $____________________________
How do you feel about that number? The reason I want you to think about that number is because your home provides a roof over your head and your car allows you to get from A to B. You’re unlikely to sell these to pay out debts and for that reason I’d argue there’s no point including them in your net worth.
Calculating your net worth is a bit like getting on the scales after Christmas, but if you want to be honest about your financial fitness, it’s something worth doing every 12 months.
When you know where you really stand, you can then start framing your decisions around what you need to do to get on the path you want to be on.
My job is providing truly independent financial advice to help my clients make informed financial decisions and put them on the path to financial freedom. If that’s the path you’d like to be on, let’s have a chat and see what we can do to improve your financial fitness.
Cheers,
Daniel