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Fitness InformationAre You Financially Fit?
by:
PT Cheng
Once
it comes to health, you go for a medical checkup to see if you're physically fit. The medical report wish tell everything just about your health.
But once
it comes to wealth, it's as important that you do a regular checkup for your fiscal health. You need to cognize wherever
you are financially before you decide what you want to accomplish financially.
What do you do to ascertain your level of fiscal fitness?
You can use fiscal statements to determine your fiscal fitness. They are financial gain
statements and balance sheets.
It plumbed boring and alien to me once
I 1st prepared my financial gain
statement and balance sheet. The process is tedious as you need to dig out things and get them organized in a proper format.
But I can tell you once you've done this checkup, you'll have a clean image wherever
you stand financially and you can take the necessary measures to accomplish fiscal freedom.
Besides that you'll be much in control of your money and cognize how to spend your money wisely.
Let's get started to determine your fiscal fitness.
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Income Statement
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First, you can prepare an financial gain
statement. An financial gain
statement is besides called profit and loss statement. An financial gain
statement consists of two sections: monthly financial gain
and expenses.
Your financial gain
would-be probably comprise salary, rent from real estate, dividends from stocks and bonds, interests from savings accounts, and royalties.
Your expenses would-be be food, clothing, utilities, car loan payments, credit card payments, house mortgage payments, medical expenses, entertainment, insurance payments, charity, taxes, and education.
List down your financial gain
and expenses into each section accordingly. Then calculate your total financial gain
and expenses.
Once you've done that, it's time to calculate your net income. Net financial gain
is the difference between your gross financial gain
and expenses:
net financial gain
= gross financial gain
- expenses
If you have a negative net income, it tells you that you spend much money than you make. You'll have to have plans to reduce your disbursement or increase your income.
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Balance Sheet
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Next step is to prepare a Balance Sheet. Like financial gain
statements, balance sheets besides have two sections: assets and liabilities.
Assets are your cash, real estate, car, bank accounts, stocks and bonds, mutual funds, retirement accounts, and businesses.
Liabilities include mortgages, credit card loans, car loans, personal loans, education loans, and taxes.
Prepare your own balance sheet by listing down your assets and liabilities. Calculate your total assets and total liabilities.
The following step is to calculate your net worth. Net worth is the difference between total assets and total liabilities:
net worth = assets - liabilities
Net worth is normally used to determine whether a person is wealthy.
You merit a pat on your shoulder if you've move so far with me. By doing this simple exercise, you are one step ahead of galore people.
You'd have acknowledged the level of your fiscal fitness by now.
So, are you financially fit?
To help you with this exercise, you can use our free money worksheet at http://www.financiallyrich.com/wealth-calculator.asp
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