Explore how your personal net worth and cash flow reports illustrate where you stand financially and can guide you towards your financial goals. When you know your real numbers, it’s easier to make better, data driven decisions about your money.
Learning Points
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Net Worth Report
Keeping track of your personal net worth can help bring peace of mind and clarity about key details of your financial life.
Net worth is the difference between your total assets and total liabilities. It represents the amount available to you if you sold all your assets at their stated value and paid off all your liabilities. It can indicate your ability to pay any outstanding debts.
Your personal net worth report is a snapshot of your financial position at a particular moment, usually at the end of the year.
Your personal net worth report can help you plan for the year ahead. It can highlight when you could shift extra savings to your savings priorities.
Your net worth is just one measurement of your wealth and financial strength.
Personal Cash Flow Report
The personal cash flow report details your cash inflows and outflows over the past year. Use it as an opportunity to review how well you’ve performed financially.
You can use the report to better understand your financial opportunities:
- Create a high-level budget for the upcoming year.
- Identify opportunities to re-align your spending.
- Shift discretionary income to your savings priorities.
Your cash flow report complements your personal net worth report. Use them to identify ways to increase your discretionary cash flow, increase assets, and decrease liabilities, especially liabilities that are not tax efficient.
Reviewing your finances in this way can re-affirm that your money is letting you live the way you want. That your money supports your values. It helps you confirm, or course correct, where your money is working toward your priorities in life and where it is not. It helps you address other questions like:
- How much am I earning and how does it align with my financial goals?
- What are my essential, living expenses and how can I optimize them?
- How can I prioritize saving towards my future goals while managing my current expenses?
As your financial planner in Saint Louis, we can help you plan for the future and enjoy the present moment.
The Next Step
Hopefully these resources provide you with a strong starting framework to understand your current financial position. When you dive in further and finish your reports, it’s easy to run out of energy, inspiration, or time.
It’s common to lose your momentum and get stuck at this analysis stage. It is important to recognize when you are stuck. What you do after you get stuck is what matters.
Sometimes we only need a little nudge to get unstuck. Sometimes we need accountability. We can all benefit from those little doses of accountability in our lives. Sometimes we can hold ourselves accountable, and other times we need to be held accountable to ourselves by others.
Working with your financial planner in Saint Louis can provide you with the right mix of accountability, collaboration, and long-term thinking. Sometimes, a financial planner can help you get un-stuck by simplifying what you need to do into manageable goals.
Who is providing you with the right kind of accountability in your personal financial life?
Disclosure
This commentary is provided for educational and informational purposes only and should not be construed as investment, tax, or legal advice. The information contained herein has been obtained from sources deemed reliable but is not guaranteed and may become outdated or otherwise superseded without notice. Investors are advised to consult with their investment professional about their specific financial needs and goals before making any investment decision.