{"id":42706,"date":"2024-03-31T12:00:00","date_gmt":"2024-03-31T01:00:00","guid":{"rendered":"http:\/\/propertyupdate.com.au\/?p=42706"},"modified":"2024-03-25T11:48:47","modified_gmt":"2024-03-25T00:48:47","slug":"assets-liabilities-whats-current-financial-reality","status":"publish","type":"post","link":"https:\/\/propertyupdate.com.au\/assets-liabilities-whats-current-financial-reality\/","title":{"rendered":"Assets & Liabilities: What\u2019s Your Current Financial Reality?"},"content":{"rendered":"

When it comes to money, what we don\u2019t know can hurt us.
\n<\/strong><\/p>\n

I\u2019ve seen this truth play out time and again when people tell me they want to get serious about their finances.<\/p>\n

They want to invest.<\/p>\n

They want to make plans for the future.<\/p>\n

\u201cGreat,\u201d I\u2019ll say, \u201cso what can you tell me about your current finances?\u201d<\/p>\n

The most common response?<\/p>\n

A blank stare.<\/p>\n

\"How<\/p>\n

I\u2019m not surprised<\/span><\/h2>\n

I know from personal experience.<\/p>\n

Sometimes we just don\u2019t want to know.<\/p>\n

As soon as we start listing our current assets and liabilities, we come face to face with both our good and bad financial decisions.<\/p>\n

Maybe we\u2019ve done a great job of saving money every month, but we\u2019ve also had a credit card balance for over a year.<\/p>\n

We need to know both the good and the bad, otherwise, we can\u2019t plan for the future.<\/p>\n

Getting a handle on our current reality starts with something simple: a personal balance sheet.<\/p>\n

To start, grab a piece of blank paper<\/span><\/h2>\n

Draw a line down the middle. \r\n\r\n\r\n

<\/div><\/p>\n
<\/div>\n

Write \u201cAssets\u201d on the left, and \u201cLiabilities\u201d on the right.<\/p>\n

Then, make a list.<\/strong><\/p>\n

Assets are anything we own free and clear.<\/p>\n

Liabilities are any debts we owe.<\/p>\n

On the asset side, list things like savings accounts, superannuation, and the value of a home.<\/strong><\/p>\n

On the liabilities side, list things like credit card debt, a mortgage balance, and any other loans.<\/p>\n

For this process to work, we need exact numbers, especially for our liabilities.<\/p>\n

Be prepared to call credit card companies and banks if needed to get this information.<\/p>\n

Again, not knowing these numbers can hurt us<\/span><\/h2>\n

One woman who came to me for help admitted that she\u2019d taken out a student loan for $6,000, but she\u2019d ignored it for decades.<\/p>\n

When she finally called, the total owed had snowballed to $34,000.<\/p>\n

We worked out a plan to deal with the debt, but ignoring this liability came at a big cost.<\/p>\n

Of course, the personal balance sheet may also reveal we\u2019re better off than we think.<\/p>\n

That\u2019s a good thing.<\/p>\n

We may have saved more and had less debt than we assumed.<\/p>\n

Once we have all the numbers, add them up.<\/span><\/h2>\n

Then, subtract all the liabilities from the assets.<\/p>\n

This number equals our net worth and our current reality.<\/p>\n

This process seems simple enough.<\/p>\n

However, if we keep avoiding or skipping this step, we\u2019ll continue to have a difficult time figuring out where we want to go, let alone how to get there.<\/p>\n

Editors note: This article was originally published a number of years ago and has been republished for the benefit of our many new readers.<\/em><\/p>\n\r\n\r\n

<\/div>\r\n
<\/div>\n","protected":false},"excerpt":{"rendered":"

When it comes to money, what we don\u2019t know can hurt us. I\u2019ve seen this truth play out time and again when people tell me they want to get serious about their finances. They want to invest. They want to make plans for the future. \u201cGreat,\u201d I\u2019ll say, \u201cso what can you tell me about…<\/p>\n","protected":false},"author":69,"featured_media":118961,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[54,653],"tags":[1015],"class_list":["post-42706","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-latest-property-updates","category-personal-finance","tag-money-you"],"acf":[],"yoast_head":"\nAssets & Liabilities: What\u2019s Your Current Financial Reality?<\/title>\n<meta name=\"description\" content=\"When it comes to money, what we don\u2019t know can hurt us.I\u2019ve seen this truth play out time and again when people tell me they want to get serious about 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