Holidays are Here!

What have you achieved financially?

The holidays are finally here! It is time to reflect on the year that’s passed and make plans for 2020, before relaxing and unwinding in preparation for a new year.

As you look back on the year 2019, a simple personal financial statement is a valuable tool for tracking what you have achieved financially, and for deciding where you would like to improve in 2020. It has two basic sections: a balance sheet detailing your assets and liabilities to calculate your net worth; and an income statement comparing your income and expenses.

Your Balance Sheet

A personal balance sheet compares your financial assets (what you own) with your financial liabilities (what you owe) to calculate your net worth. It is a great way to determine where you are financially.

Simply start by listing all your assets (cash, property, investments and valuables) and their values, and then all your liabilities (loans and credit cards) and the outstanding balances.

The difference between your assets and your liabilities is your net worth. Certainly, one financial goal required for financial success is to continually increase your net worth. Your goal might be to grow your net worth by 10% in 2020, and by 20% per year thereafter.

You can increase your net worth by decreasing your liabilities, or increasing your assets, or both. So, to achieve your net worth goal, you could set a further goal to decrease your total liabilities by paying off debt, for example: “Reduce debt by 25% by Dec 2020, to become debt-free in three years”; and another goal to grow your current assets, for example: “Increase assets by 10% in the next 12 months, and by 15% per year thereafter.” You can then plan the steps that will make these goals possible.them.

Income Statement

The second part of your personal financial statement is the income statement, listing all income and all expenses to calculate your monthly surplus (what’s left over at month end) or shortfall (what’s not getting paid).

Certainly, continually increasing your surplus is another important goal for financial success. Your goal might be to grow your surplus by 5% in 2020, and by 10% per year thereafter.

You can increase your surplus by decreasing your expenses, or increasing your income, or both. You could set a goal to decrease your total expenses, for example: “Reduce expenses by 5% per month”; and another goal to grow your income, for example: “Qualify and apply for a promotion”. You can then plan the steps that will make these goals possible.

Remember, your financial coach is ready to help and will gladly assist you to create your personal financial statement, set 2020 goals and plan the steps to achieve them.

Simply click here for confidential and professional assistance, whether telephonic, electronic or face-to-face financial coaching and support.