If You Don’t Do This You Will Probably Not Gain Control of Your Personal Finances

Financial Assessment

Have you ever wondered how you can gain control of your finances?

Have you ever wondered whether or not you will ever find the time to manage your finances?

I have seen many individuals who make a good income and struggle with managing their finances.

It’s unfortunate when a few small changes can help them save time and get their finances under control.

I know you want to have control of your finances so you can have a financial peace of mind as quickly as possible.

And that’s why I am going to show you what you must do first to begin gaining control of your finances so you can have the financial peace of mind you desire.

In fact it’s the same place everyone who wants to achieve financial peace must begin.

This one simple thing is:

Understand where you currently stand financially

The fastest and easiest place to start helping you get your financials under control is to know where you currently stand financially.  To gain control of your finances you need to only look at your current financial situation. It will help you know what changes need to be made.

The best way to do this is to perform a financial assessment.  It’s the first step in your journey to simplify and to have an understanding of your current finances. Doing a financial assessment answers the questions you need to ask in order to simplify your finances.

To begin your financial assessment take a few minutes to think about what your current financial situation looks and then write it down. Your entire financial picture can be seen on your monthly statements. To help you have better picture of what your current finances looks like gather all of your bank statements, debt statements (credit cards, mortgage, student loans, or other debt),and investment accounts (retirement and non-retirement).

Also gathering the statement will show you how many accounts you have and what is paperless and what is not paperless.

Now that you have gathered your statements write down your thoughts on what your finances look like. Many times we believe our finances are better than or worse than we thought but the only way to determine this is to actually take a look at them instead of just guessing. I have assumed things were better than they were but once I took a look at the situation it was worse than I thought so the best way to do this is to look for yourself.

Additionally while you have all of your statements in front of you why not construction a personal financial to determine your current net worth. Is it positive or negative? There you go. You have seen just one of the 9 steps to simplify your finances so you can begin to have the financial peace of mind you desire.

So the secret is to know where you stand first.

I have created a cheat sheet and checklist to help you begin to simplify your finances within 30 days.

To gain access to the checklist and cheat sheet click below to get your hands on this which can help you get control of your finances within the next month.

Til next time, remember to take one step at a time to simplify.

4 Simple Numbers You Should Know to Improve your Personal Financial Health

4 Simple Number - Simple Financial Lifestyle

Do you know how financially healthy your finances are? Do you know what numbers can help you determine your financial health?

There are four numbers you can calculate to help you determine your financial health. Similar to a health check knowing these four numbers will help you improve your financial life as well as help you simplify your finances.

So you ask what numbers will help determine my financial health. Here are the four numbers you should monitor regularly to help you simplify your finances no matter how unhealthy they may look at first.

Simple Financial Lifestyle Net Worth

Net Worth

What is my net worth? How do I calculate it?

Your financial net worth is simply your financial assets minus your financial liabilities. Knowing your net worth is an excellent way to measure your financial health. Calculating your net worth will help you track your financial progress from year to year or from month to month.

When you calculate your net worth you want this number to be positive not negative. If you have a negative net worth this is an indication you have more liabilities/debts than assets. So review your liabilities to see what liabilities you can reduce to show a positive net worth. A simple way to improve your net worth is by reducing your debt and accumulating appreciating assets.

Simple Financial Lifestyle Debt to Income

Debt to Income

What is my debt to income and why is it important? Debt to income measures the amount of income you earn versus the amount of debt you have outstanding. It’s another good indicator of your financial health.

You calculate it by totaling up all of your monthly debts then dividing it by your income. Using your net income is a more accurate calculation because it is the actual amount you take home which is available to service your debt.

The lower number means your finances are health and indicates low amounts of debt. A high number will indicate a high level of debt. A healthy debt to income number would be less than 35%. As you reduce your debts this number will be lower.

Simple Financial Lifestyle Score

Credit Score

The next number you should know to help you gauge your financial health is your credit score. Your credit score determines your credit worthiness which is based on your history of managing to payment of your bills in a timely manner.

Credit score can range from low 400s to mid 800s. Here is a break down:

• Excellent credit score 720 and above
• Good credit score 719 to 680
• Average score 679 to 620
• Poor score 619 to 580

Maintaining a good to high credit score has its financial benefits because you will usually receive better interest rate as well as financing terms when you are financing a purchase. This will save you money long term.

When you have a low score you may not be able to obtain financing or offered a higher rate and less favorable terms. Knowing your number helps you during financing process because if you have a good score you can use to your advantage.  If you have a low score, it will not be a surprise if the terms are not favorable.

Obtaining a copy of your credit report along with your credit score is the best way to determine why your score may be low. There are several reason why you may have a low score. When you obtain your report review to make sure the information is accurate and then look to see what can be done to improve your score.

Simple Financial Lifestyle What is your savings percentage

Saving %

Yes you may save some money. But do you know what percentage of your income you actually save annually?

Having a healthy savings has significant benefits and is another indication of your financial health. Calculating your saving percentage is simply dividing your gross income by your savings amount. When calculating your total saving take into consideration the amount you saving for retirement, emergency fund and any other general savings.

Knowing your financial numbers will help you simplify your finances. So take action by determining your:

Net Worth
Debt to Income
Saving Percentage
Credit Score

Setting a goal to improve your just one of these number will help obtain the financial life you desire. Once you work to improve one of your numbers the others are likely to improve as well.

So which number will you work to improve so your finances can become healthier?