Personal Finance Management – The Final Part C

Personal Finance Management – The Main Thing

If you have read my posts from the beginning, then you know that it is important to start with the goal in mind. So you have thought about exactly what you want to achieve. Where you want to be in one year and where you want to be in five years. That’s the most important.

Keep Main Tings First

If these lines are new to you, then go back to “Secrets Of Personal Finance Management – Part A”.

You also learned that tracking Your expenses and income is vital so that you can see where you will end up if you go on as before.

If you skipped this part, it’s not a good idea to read on now. It has a bit to do with hard work.

Please go back now, go through the chapter “Start Your Personal Finance Management Now – Part B”. Start tracking Your finances and only continue when you have a clear picture of Your income and expenses.

For everyone else, …

The Future Starts Now – Master Your Personal Finances

It is high time to take stock. This exercise can be painful, but it must be carried out, unfortunately it cannot be done without. However, you will feel relief in the end.

Time to start.

First you need a spreadsheet program, with which you create a table, the right side will show Your assets, the right Your liabilities. Plan at least three columns for each page. We start with Your liabilities. Yes, exactly all debts, the money that you have to repay.

Let’s start with a little brainstorming. This will help you write everything down without missing out on anything that might be important.

Personal Finances – Where The Brain Stops

Let’s start with the apartment or house in which you live. Is it Your property or do you live for rent? If it’s Your property: did you buy it in cash or finance it? If you’ve funded it, then the mortgage is the debt you still have to pay to Your lender (in most cases it’s the bank). You can see this amount from the last annual statement. Or you call Your bank, get connected to the mortgage department and ask how high Your remaining debt is for Your mortgage loan. You set this amount in the list (ideally an Excel spreadsheet or comparable software). That would be done.

Are there any other mortgages you need to service? Then enter the remaining debt in the table. For all other mortgages, of course.

Let’s just go ahead: is Your credit card charged? How much? That too must write on the right side. Do you have any further debts for items or services that you have bought and financed? These include, car, boat, furniture, RV, or other items. This form of debt is also called consumer debt. Please write each individual amount on the right side.

What about Your account? Most people usually have a big minus on their account, if it should be the same with you, then add this amount.

If there is any other debt that you have had to incur due to an inheritance or debt and sureties, this amount must of course also appear on the right.

Tax liabilities or other liabilities that may have arisen from previous business activities also belong on this right side.

If you can think of anything else that I haven’t mentioned, don’t hesitate to write it down.


Every Journey Starts With The First Step

Now an important step has been taken to take stock of Your finances. So we come to the more pleasant part. The left side.

All Your assets are here. Everything you own has everything that belongs to you.

Let’s start with Your house here again. If it is yours, find out what the current market value of Your property is. There are various real estate portals that have determined an average value for a specific region. This value is usually shown as a comparison when you are looking for real estate. Enter the key data of the property that you are looking for in Your area, so to speak. So compare the number of rooms, sqm and maybe a similar location. The system will present comparable offers to you. You will usually also find a mirror, i.e. a range, of the price per square meter. Take the middle and multiply it by the number of Your square meters. So now you have a reference value. It can deviate from the true value of Your property, because the value of a property depends solely on the supply and demand. As a rough guide, however, the method described can be used well.

You now use the same procedure for other properties if you still have one.

As the next item you use securities (stocks, funds, gold, other securities) and the current value is directly visible in online securities accounts, in rare cases you have to contact Your bank. If you have shares in companies (cooperatives, participations) you must also have a valuation carried out.

Do you still have cryptocoins? Or do you have an ongoing business or company, then Your tax adviser will surely help you with the valuation.

Please do not forget the residual value of Your car and other valuables, that must also be included.

Now you have a good line-up, Your assets are on the left-hand side, below the last line you have the spreadsheet program calculate the total and on the right-hand side as well, here are Your liabilities. The program can now subtract the right side from the left. What is left is Your fortune.

Numbers Never Lie

If it is in the plus range, be happy and grateful. If the total has a minus in front of it, then that’s the way it is. You can change it and that’s the most important thing.

In any case, you now have an overview and you know where you are. That gives you strength and self-confidence.

You should save this list as a Financial Statement. It is now Your duty to update this statement. Preferably monthly, but at least once a quarter. You call it up and save it with the addition of the month and year from “”, only then do you make Your changes and save it. The next time you take the most current and do the same: save the calls under the current month and year and then change them. This way you can closely follow Your balance sheet. You will be amazed at how quickly and how far this will take you forward.

Now we have laid the foundations to get started. The hard work is done, the rest of the research is interesting and exciting and has a lot to do with the mindset.

If you want to continue, you can register here. In my newsletter I set up a program that will help you focus on the left part of Your table. It will also help you to gradually eliminate the right part, so that Your (positive) overall result gets bigger and bigger. You will have all the tools and tips at hand so that you can have fun with Your finances.

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