"This year, I resolve to smoke less."
Did you make a new year’s resolution that sounded something like this?
“This year I’m not going to get further in debt.”
“I’m going to pay off all my credit cards.”
“I’m going to stick to my budget.”
The year’s half over.
Did you even progress toward fulfilling your goal?
Did you even remember you had a goal?
New Year’s resolutions don’t work. They’re short-term goals that have no connection to your everyday reality. If something’s worth doing on January 1, it’s worth doing on July 7.
Take the bride who decides to lose 15 lbs. before her wedding. She might, but even if she does she’ll probably gain it back before her honeymoon’s over. She has a temporary motivation to drop the weight, but no permanent plan to change her lifestyle.
The same principle applies to gaining wealth. You’ll still have to change your lifestyle & have a long-term plan. And you gain nothing by waiting.
Building a lifetime of financial mastery and success means knowing where you are and where you want to end up.
Your net worth statement is your financial scorecard – a snapshot of where you stand at any given time. Calculate your net worth by adding up all your assets and subtracting your liabilities. You increase your net worth by taking your cash flow and buying assets. You decrease it when you take equity and buy consumables (e.g. cars, clothes, vacations.)
Track your net worth each quarter. Make it your goal to increase it 3% quarterly, which is 13% annually. Do that and you’ll double your net worth in 6 years.
We’ve even created a template for you.
Before you start, here’s what you’ll need:
• Bank statements (checking, savings, money market, IRA)
• Mortgage statements
• Approximate value of real estate you own
• Balances for credit cards, car loans, lines of credit
• Approximate value of your car (which means you need a page open at KBB.com)
• Loan balances for anyone who owes you money
• Tax liability (if you pay quarterly & you know it) or tax refund (if you’ve already filed & haven’t received it yet)
If this scares you, do it anyway. If you say you’ll get to it later, why are you willing to delay planning your financial future?
Stop playing Mafia Wars on Facebook and do it now.
