It takes courage to really look at your finances.
I mean REALLY look at your finances.
Do you know every dollar you owe… and every dollar owed to you?
There is power in knowing exactly where you stand, even if it is a little ugly.
If you do not know your current financial situation take a few minutes (or an hour) and look up all of your current balances, minimum payments, credit scores (if you are in North America), APRs, and total credit available on your credit cards. This includes all loans- personal, auto, home, student- and all credit cards.
Write down any money owed to you. This would include your next paycheck or expected income plus earned vacation time if you are employed.
Make a note of your current balances in your various accounts and any cash on hand. Write down what your assets are worth (home, retirement/investment accounts).
Once you have all this information, you have your balance sheet. If you own a business, you know how important this is.
Do you need a balance sheet for your personal finances?
It can definitely help. As the CEO of your life you will be able to see things you may not otherwise notice. And, looking at your personal finances as though they were a business makes it less emotional.
If your liabilities (what you owe) exceeds your assets (what you own plus what is owed to you), you have some work to do. Take a look at where you can cut expenses or increase income so you can pay down those debts.
If your assets exceed your liabilities, look for ways to strengthen your financial position even more. Pay off any “bad” debt. Increase the percentage you put towards education, savings, investing, play, and giving. Perhaps start investment or savings accounts for the children in your life.
If you are unsure of what to do, DM me. I am always happy to help you figure out your best next steps.
Bonus points: Check this on a regular basis, no less than annually. Quarterly is better. And, if things are changing quickly for you, monthly is ideal. Compare the new balance sheet to older ones and see if things are improving (yay!!!) or starting to slide.