Step 1 for A Secure Financial Future – Take Stock!

Whether you have broken your 2020 new years resolution by now or not, for the most of us, our finances continue to be a concern.

Here is the first step towards planning for a Secure financial future.

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Take Stock of Current Financial Status, that is,

  • Calculate your current NET WORTH.
    • Do this at least quarterly; certainly
    • do it once a year!
  • Compute the current value of all your assets (what you own).
    • The total of non-obligated funds (balance) at all bank accounts
    • The fair market value of all real assets you own
      • trade-in value of cars, motorcycles, boats, scooters, trucks, etc.
      • Current fair market value of all real property you own
        • house(s), farm(s), land(s), etc.
      • Current trade-in value of equipment and appliances you own
        • TV’s, Refrigerator, tools, computers, sound systems, etc.
      • Current trade-in value of all furniture, jewelry, antiques, etc.
    • Compute the current value of all financial investment instruments
      • (these are the value of these instruments
        • that will be available to you on demand
        • after deductions of all penalties, fees,commissions etc.)
      • Cash payout of all retirement accounts
      • Cash payout value of bonds, stocks, etc.
      • Cash payout of life and other insurance policies
        • if any;
      • Cash payout of all other investments
  • Compute your total debts (Liabilities);
    • Current short term loans
      • (those payable within 1-5 years)
      • credit card(s) balance(s)
      • total current value of all car loans/note(s)
      • other short term debt(s)
        • e.g. lease or rental obligations
    • current value of total long term obligations
      • Mortgages/house payments
      • Student Loans
        • many student loans have a payoff value
          • attached to your total balance
      • Other Long term contractual Obligations
        • current value of total child support payments
        • current value of alimony or divorce settlements, etc.
        • current value of all other court ordered payments, etc.
  • Compute the Net Worth
    • = Total Current value of Assets – Total Current Value of all Debts.
    • This is the foundation of all planning for a secure financial future!
    • The numbers need not be super accurate.
    • This is just a birds eye view of your current position
  • Now that you know your current financial status,

  • the Next Step is to SET SOUND FINANCIAL GOALS
    • That is, clarify where you want to be
    • That’s in the next Post

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