What Have You Got Financially?
BOSTON (CBS) - You will need to generate a net worth statement to figure out what you got and then do a cash flow to figure how and where you are spending your money.
What Have You Got Financially?
A net worth is a snap shot of where you are financially at a given moment in time. It is a list of your assets and your liabilities.
First, list your assets and break them into two categories; Use Assets and Invested Assets. The use assets are what you use every day and the invested assets are the assets that will help you achieve your goals.
Next list your liabilities. This is the money you owe; mortgage, credit cards, etc. You subtract your liabilities from the assets. Hopefully it's a positive number. A negative number means too much debt and it's probably credit cards or an upside down mortgage. House values in some areas are still down.
Now for your cash flow. You'll want to figure out where your money goes each month. What comes in is usually easy; your salary, child support, commissions, social security, unemployment.
Now calculate what goes out and where it goes. Spend a month doing your cash flow. Don't forget those annual bills and the ATM withdrawals. You subtract what goes out from what comes in.
And you want a positive number here. You want to spend less than you earned for the month. That's a positive cash flow.
If you are living paycheck-to-paycheck that's not bad but you will need to do better if you want to have money left over to invest or save.
Do you have more month than money? Are spending more than you are earning and using your credit cards to supplement your income?
You have got to figure out a way to get a handle on your credit card debt and eliminate it. Carrying credit card debt month-to-month will not allow you to reach your goals.
Couple more things: If you cannot do it alone seek some help. Consumer Credit Counseling is a good place to start. Worksheets can be found on my website.
To find a financial planner to help you achieve your goals and dreams in your area contact the FPA, the Financial Planning Association's local Boston chapter: or their national website.
Money Conference Alert!!
On October 11th I will be the key note speaker at The Money Conference which is a FREE one-day event presented by The Office of Massachusetts State Treasury. It will be held at UMASS Boston and the first 500 registrants will get a free copy of my newest book, Money, Your Personal Finance Guide.
There will be afternoon classes on everything from budgeting to buying a house. The Financial Planning Association of Boston will have volunteer financial planners there to help answer questions. You can set up a meeting with a Money Mentor when you register. If you have questions about the conference, contact Sheila O'Loughlin of the State Treasury at (617) 367-6900 ext 615.
