Know your financial status
In the previous blogs we have thought about our financial dreams and how to set financial goals in a SMART way in order to make our dreams our reality. To achieve your financial goals, it is equally important to analyse and understand what your current financial status is. Think of it this way: if you want to drive to a certain destination (future goal), the GPS will use your current location (current financial status) to determine the best route (financial plan) for you to take to reach your final destination.
To understand your current financial status, you need to ask yourself these questions at least:
- What is your net worth (assets less liabilities)?
- How much is your monthly income?
- How much is your monthly expenses?
- How much debt do you have, what are the interest rates and repayment periods?
- How much do you have available as an emergency fund and how much should you have?
- How much investments do you have, what are the interest rates and how liquid are they?
- How much do you currently have in your retirement fund and how much do you need at retirement to retire comfortably?
Write all the numbers down to obtain an overall picture of your current financial status. Spend time getting to know these numbers. To get you from your current financial status to where you want to be, you also need a proper plan. When compiling your plan:
- Be realistic
- Do it in detail
- Set timeframes
- Include calculations
- Break it up in smaller milestones
Once you have a plan written down, you are set to go and achieve your financial goals. Like with anything else in life, you need to take action to make something happen. If you don’t take action, your goal will remain a dream. You need to make an effort putting your financial plan into action. It starts with a choice and only you can make that choice. Start small, but make a start. You will not regret it.
To calculate your net worth as well as your income and expenses, download your FREE Financial Goalsetting worksheet here.
Written by Ronel Jooste
CA(SA) and Financial Coach
Contact Ronel: email@example.com