Where do you stand with money? Are you financially healthy? When you know where you stand, you can make your life dreams a reality. However, it can be overwhelming and painful to look at your financial health.
Find out where you stand with money with these three simple steps (and see if you’re full of b.s.)!
Your Balance Sheet is the ultimate money B.S. indicator.
When you complete these three steps to find out where you stand with money, you’ll have your own personal Balance Sheet. Anyone can “look rich,” by swiping a credit card to instantly get designer clothes, sunglasses, purses, or jewelry. Your Balance Sheet shows the real deal. Are you building wealth or borrowing your way into looking rich?
You can appear to “have it all,” but have tons of debt with a negative net worth.
What exactly is a Balance Sheet?
Your Balance Sheet is a picture or snapshot of where you stand financially, at a specific point in time. Think of filling in your Balance Sheet as having the DTR (define the relationship talk), but with money. Your Balance Sheet shows the total value of your assets (everything you own) and your liabilities (everything you owe). Your personal net worth is your assets minus your liabilities.
Three Steps to Find out Where You Stand with Money
1. Calculate the total value of your assets
- Bank/ checking account
- Savings account
- Retirement accounts- 401(k) plan, IRA, 403 (B), or pension plan
- Other investment accounts- stocks, bonds, etc.
If you’re renting an apartment or leasing a car, then the value on your personal balance sheet for these would be zero (you don’t own it!).
2. Calculate the total value of your liabilities
For your liabilities include the value of what you owe on your:
- Home mortgage
- Car loan
- Student loans
- Credit cards/ line of credit
- I owe you’s/ payday loan, overdue utilities, back taxes, etc.
- Medical debt
- Other- any payment plans for items like tires, electronics, furniture, etc.
3. Calculate your net worth
Finally, the last step to see where you stand with money is to calculate your personal net worth. Your personal net worth is your total assets (everything you own: savings, investments, home, and car) minus your total liabilities (mortgage, car loan, student loan, medical debt, credit cards, or any type of debt).
You can make a million dollars and have a negative net worth. Or you can make $35,000 and be a millionaire. Filling in your Balance Sheet once a quarter is the best way to find out where you stand with money. You can see your progress firsthand (your assets growing and liabilities shrinking)!
Use these three simple steps to find out where you stand with money!