Help, how do I take control of my finances?
I had a meeting with a potential client last week who’d been following me on Twitter and as a result of my tweets had been motivated to get to grips with her finances.
Hooray the message is getting through!
The thing that confused her was “where to start?” If I was Julie Andrews I could burst into song now with a quick rendition of “Let’s start at the very beginning”. A bit cheesy, I know, but infact that is a very fine place to start.
We all know that if you have a goal for any form of progress or improvement you need to know your starting position so that you can use this as a base to check how will things are improving.
But how do you calculate your starting point?
You need to calculate your “net worth”, which represents the total of everything you own less the total of all that you owe.
What you own will include the value of your house or any investment property (at this stage exclude the value of any mortgage on it), the value of any investments, pensions, endowments etc., and any cash and bank balances.
What you owe will include the amount required to repay any mortgages, loans HP agreements, credit card balances, overdraft etc.
Having written down and totalled all the values you can then deduct one from the other to calculate your current net worth.
This represents your starting point and can then be recalculated at regular intervals (6 monthly/annually) to see how your position has improved.
What if your net worth is negative as your starting point?
Well, if that’s the case, it’s not a great position to be in since it means you owe more than you own. But at least having calculated it you have a base level and can then put actions in place to improve the situation. Knowing your financial position, even if it’s not what you want to hear, is a lot better than burying your head in the sand and ignoring it. At least once you’ve faced up to it you can start to take action. A bit like Nike says “Just do it”.
If you’re looking to take control of your finances please do sign up for my eBook download. This will help you get to grips with your finances and feel more in control.
I look forward to speaking with you in the future.
photo credit: flickr/elycefeliz
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