Getting an understanding of your current financial picture is critical to help you achieve the financial future you want. The three main components of your current financial state are your liabilities, assets and cash flow.

Look at Your Liabilities, Assets and Cash Flow


Liabilities include required payments and debts, such as the outstanding balance on your credit card, auto loans, student loans and your mortgage. 


Your assets are your savings and the property you own. It includes any collectibles, your car and your house. Assets also include your retirement accounts and the cash you have in your savings and checking accounts.

Once you have listed liabilities and assets, come up with your net worth by subtracting liabilities from assets. For younger people such as Millennials, this is usually a negative number, particularly if they have student loans that need to be paid off.

Cash Flow

Now that you know the number for your net worth, it is time to look at your cash flow. This is how much you earn and how much you spend. Go through your recent credit card statements and your bank account with an app or a spreadsheet. If you earn more than you spent, you can create a stable money plan and can save money. 

Most folks, however, will find that they spend more than they make and need to make a few adjustments.

If this sounds like you, analyze every expense you have. Do you need subscriptions to HBO NOW, Netflix and Hulu all at the same time? Can you cut back to less-frequent pedicures? 

Slashing your budget can be like starting a new regimen of exercise or going on a diet. Remind yourself why you are making sacrifices and what your long-term goals are. It is easy to give up Friday nights at a bar or restaurant if you are saving for law school, for example.

By Admin