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Airing out Your Wallet
Financial Spring Cleaning
By Teri Brown
Florance suggests that your next step should be a financial inventory. This will allow you to estimate your net worth, which is valuable in determining your current financial picture and planning for your future. Make a list of all your assets such as bank accounts, investment accounts, retirement accounts, home, automobiles, etc., and write down the balance of each account. Next, make a list of all your liabilities, which is the money you owe such as credit card debt, home mortgage, automobile debt, school loans, etc. Finally, calculate your net worth by deducting the total liabilities balance from the total assets balance.
"Determining your net worth is important in managing your finances because you can only manage what you know," Florance says. "Once you know where you stand you can begin making changes to help you increase your net worth right away. Make sure and update this inventory at least once a year so you can see how your decisions have impacted your net worth."
Jennifer Key of Montevallo, Ala., has learned throughout the years that organization is key to keeping a household running smoothly. "If our finances are straightened out and something comes up, we don't have to worry about where are we going to find the money," says Key, who now uses a computer program to help keep her finances in order. "Before I changed over to Microsoft Money about a year ago I put everything in a ledger and had a notebook full of loan, credit information and other important stuff. As bills come in, I try to take them immediately to my 'in' slot to be paid with the next paycheck, so wen I sit down, they are there and I don't need to go searching for them through stacks of junk mail."