Are you worried about maximizing your financial situation? Then this article is for you. Here are the steps to take to take control of your money.
Most of us have the purpose of making good investments, minimizing taxes, overcoming inflation, and managing money. However, even if you recognize how important it is, much can happen between you and this will:
What, then, are the steps to take?
- There never seems to be the right time to dwell on this subject;
- When he finally decides to devote some time, he is assaulted by a paralysis, not knowing where to start, or afraid to make mistakes.
Gathering a whole financial plan can seem scary. You may have even created a plan that you are having difficulty following or are confused about which steps to take first, or are afraid that it will not cover all the necessary vectors.
Determine Your Current Position
This is the starting point. To know where you are currently you need to know what your assets are, and your liabilities, ie what you have at the current market value (eg, house, car, deposits, shares, etc.) and what you owe: credit of the house of the car). The difference between one and the other is your starting point (or, Net Worth).
Imagine the simplistic case of a stock you bought for $ 1 in 2008. The market value of the stock is currently $ 10. In your assets you must account for $ 10 and not $ 1. income and expenses, in terms of cash flow, ie inflows and outflows of money. Why is it important?
- Indicates your effective savings and investment capacity.
- Let’s see what level of life you’re leading.
- Let us evaluate if it is above or below your possibilities.
- It identifies problem areas.
Particularly in the aspect of expenditure, divide expenses by category, be diligent and detailed, and above all do not underestimate your expenses.
Now you know, set financial planning, what are the initial steps to take and how to determine your current situation. If at the end of this exercise you find that you are not where you would like it, do not be discouraged.
The first step in solving a problem is to recognize that it exists. In the next article we will address (i) the definition of objectives and (ii) the development of a plan to achieve them.