A new year is approaching and now is an excellent time to take stock of your financial life. Having control over your finances provides such peace of mind. When you know what you have and what you need (and want), you can set realistic goals and start to reach your financial dreams. Step one in taking control of your financial life is knowing what you have. And as simple as it sounds, many people don’t have an actual accounting of their net worth.
Know your Net Worth
In order to get a grip on your financial situation you need to know your net worth. After divorce, this may have changed dramatically. Make a choice to dedicate some time and attention (even if it gets emotional) to figuring out where you stand financially. This is step one in taking control of your financial life – you have to know where you stand by knowing your net worth.
Take out a sheet of paper and grab your computer and any financial documents that you may have. Label a sheet “assets” and begin listing all your assets – cash, savings, investments such as stocks or retirement accounts, real estate, valuables, and money owed to you. Don’t forget every single account. You may have older retirement accounts you’ve forgotten from past jobs or random savings you’ve set up. Account for everything. This is the time to get yourself organized.
After you’ve compiled your assets, label a sheet “liabilities.” Now take stock of everything you owe. This may include student loans, car notes, mortgages, and credit card debt. Again, make sure you’ve covered everything. If you’ve got a lot of credit cards, take the time to account for all debts. This may include logging into a lot of accounts to find exact numbers. Take the time to do it right so you’re starting out in the right direction.
Now do the math …
Assets – Liabilities = Net Worth
This is where you stand financially right now. Every new year I take the time to reevaluate my net worth. Obviously, you want this to go up. It’s like taking your financial temperature – are you getting healthier with a stronger net worth?
If you look at your net worth and you’re in the negative, or far from where you want to be, take heart in knowing you are taking a step in the right direction.
If you’ve been through a divorce, you may have suffered immensely in the finance department. Give yourself a break and know that with time, things will get better.
I’m going to continue a series on taking control of your financial life. This is the first step. Start here and know you are going in the right direction by gaining control of your finances and working to reach your financial dreams!
Step TWO is up and has a super helpful, easy to use spreadsheet for tracking expenses and setting up a budget! Find it here.
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