You are at your local store picking up a couple of groceries for dinner or perhaps a bottle of wine, you tap your debit card and it gets declined. So you pull out your credit card, tap away and off you go. No big deal we have all been there…… except you think to yourself - where did it all go? You know it’s close to the end of the week but surely you haven’t spent ALL your pay? This seems to happen more often than you would like. You know you need to start managing your money better but have no idea how?
Let me help you get started with managing your money.
In today’s episode we cover how to get started managing your money.
• You will learn about what net worth is.
• Why you should know your net worth
• How to calculate it.
As this is the very first episode and post for the Money Mindful podcast let me start with a brief introduction:
This podcast is about sharing practical information about MONEY. How to make it, how to manage it and the mindset you need to create it.
In each weekly episode I will share practical information about money that you can apply in your own life. As well as focussing on the mindset you need to make it. I will share with you what I personally do, not because I think that that is the only way or the best way, simply because I think it can be so valuable to hear what other people do in order to learn for yourself what’s possible. It’s a very different experience reading a strategy in a book as apposed to hearing what a real life person is actually implementing for real in their life.
If one listener or reader applies something I do or learns something in this podcast that has a positive impact on their finances my work is done and I will be very happy because this is what this show is all about. I’ve created this podcast because I just want to share knowledge about making and managing money. There is so much practical information and strategies available to make more money and I will certainly be giving you lot of information about that but I also want to dive a little deeper and explore the mindset behind having money and abundance in your life. You can certainly create more money in your life by improving your money habits, I have no doubt about that, but I also believe the way you think about money and the beliefs you have about money determine how much you will have.
I’ve read a lot of books about finance and personal money management which, have been really helpful and fantastic but the information I have also really valued and craved is hearing other peoples’ stories. I love hearing about other peoples’ wealth journeys, in fact I’m fascinated. I want to know: What do investors do? Who are they? I want to talk to them? Who do they bank with? What insurance do they use? Did they use a buyer's agent to purchase their investment property?
I want to know it all because it helps me uncover what I don’t know I don’t know. Right?
So without further ado I want to get straight into it and provide you with some helpful information to actually get you started on your money management journey today.
Let’s Get Started
I think many of you would agree- one of the hardest aspects of making change in your life is simply getting started. It’s easy to delay or procrastinate about starting something new when you don’t know what to do or where to start. What should you do first?
I don’t think it really matters too much where you start as long as you actually make a start because that will lead you to the next thing. The good news is, this is what we are going to focus on today. I’m going to help you now so when you finish reading this today you will have some actionable steps you can take away TODAY to improve your finances.
So lets get started:
Step one is finding out where you are today.
Just like a GPS in order to plan and set your journey to a new destination you must first identify where you are right now.
Where am I financially?
What is my net worth?
This is a simple task that you can do this week or even today.
Let’s delve into this a little deeper.
What is your net worth?
Taking the time to find out where you are- your net worth. This means getting really honest with yourself. Sorry folks but this requires some work.
You need to look at your financial situation. What is your net worth? By net worth I mean when you add up all the money you have and deduct all your debt what you have left is your net worth.
It’s actually really easy to do but it requires some effort and time. It’s worth it.
If you are in some form of partnership with a significant other you may choose to do this task using your combined assets and debt or you may prefer to do it individually. There is no right or wrong way, just choose what works best for you.
I want you to write two lists.
The first is a list of all your assets. This includes your house if you have one, your car, your household items, for example clothes, white goods, camera gear, bicycle everything etc.
This isn’t a traditional way of looking at assets, some would argue that your home and car are liabilities not assets but for the purpose of this exercise I just want you to gain an understanding of -if you sold everything you owned today how much money would you have.
Now the second is a list of all your debts. I want you to write down everything you owe. Car loans, personal loans, mortgage, HECS/HELP debts any student loan debt you have, credit card debt.
Then you need to subtract your debt from your assets. This will give you your net worth. This will tell you a lot about what you believe about money and where you are right now financially. For some of you that figure might be a net worth of $500000 for others it might be a negative net worth -$80000 or -$5000.
Whatever number your net worth is, especially if it’s in the negative, please don’t freak out or beat yourself up about it, ok. This is not useful and doesn’t help you. It doesn’t matter what the net worth is. The only thing that matters is that now you know where you are. You can start to work on where you want to go.
To make this easier for you I’ve included a What is your net worth? worksheet for you. Now this is a simple exercise. I don’t want you to dismiss it because it seems so simple or because you might try to convince yourself you don’t need to do it. Let me explain:
Just like someone who is over weight and doesn’t want to get on the scales. They’re in denial, they don’t want to acknowledge or know what they really weigh. It’s the same with money. Some people are in complete denial about their financial situation. Not looking at bills or managing their debt. Wherever you are, financially is ok. It’s fine. But to change direction financially speaking you need to be honest with yourself. Look at your finances and know where you are so you are in a position to make change.
If you don’t like what your net worth is, you can change it.
Your homework assignment this week is to take the time to find out where you are today. Complete the ‘What is your net worth?’ worksheet.
To access the ‘What is your net worth?’ worksheet click here