If you want to improve your financial life, you must know where you are starting. The net worth statement provides a snapshot of where you are financially based on your past financial decisions. Do not make the mistake that many folks make by measuring themselves based on their income or how much in the way of “stuff” they have. It’s not how much you make or have; it’s how much you end up keeping after each paycheck comes in!
Complete your net worth statement one time each and every year, preferably around the same time of the year. Take your time and identify the value of each asset you have on one particular day and how much you owe on each liability on that date, as well. Place those numbers on the net worth example that you can find on this website below.
Take your assets, and subtract your liabilities. This is your net worth. Don’t freak out if it is negative. My first one was negative, too. Chill out, and don’t beat yourself up about it. The key is to get some real numbers down on paper and see where you are. This is your starting point. This is also the time to take responsibility for your situation. You are the answer to a better life!
Go back and fill these numbers in on your financial plan. Start making your short- and long-term goals for the coming year. This is where you attempt to increase your appreciating assets (stocks, bonds, and real estate), while decreasing your liabilities (pay off debt at an accelerated rate while considering opportunity cost all along the way).
Hold yourself accountable every year, as you strive to increase your net worth from the previous year. If you are on the right course, you will see your net worth go up in most years (there will be a few years where it may go down as your stocks, bonds and/or real estate take their occasional nosedive in their respective markets). You can do this!!!!!!
