Benefits of Finding Out Your Financial Position
- Allows you to plan your pathway forward
- Gives you the ability to see how you are improving
- A one stop shop for comparing against the market
- Puts a spotlight on expensive debt like Credit Cards
Procedure:
- There are a lot of great apps that can assist you with recording and easily updating your current financial position. These apps connect up bank accounts, allow you to record assets you have (like houses, shares, retirement savings etc.) and also record your liabilities (like mortgages, personal loans, car loans etc.). If you’d prefer not to use an app then you can always use a pen and paper.
- The next step is to find ‘Value’ in each of your assets or liabilities. An easy example of this is either by finding a lower mortgage rate for your mortgage or similarly comparing your long term retirement savings account with the long term averages that can be obtained from other fund managers.
- The next step is to consider how much cash you have in your arsenal to protect against unknowns out of your control and establish how much you should have on hand. This is often overlooked and people never challenge whether they have too much or too little cash on hand. The excess needs to be considered for investment purposes. Similarly having too little needs a plan to reduce cash outflows from your debt, spending.
- Focus on ‘Return On Equity’ or more simply put focus on extending the gap between your assets (shares, houses, retirement savings, business investments) and liabilities (mortgage, personal loans, credit card debt etc.)
Health Wealth Happiness 