Getting Started

Looking for a way of getting started?

If you are going to take control of your finances, you first need to work out where you are now. Getting started is as easy as working out how much money you have coming in, where it has goes and what you have to show for it!

Step 1: Identify Your Income Sources

The first step is to identify all of your current income sources, including salary and wages, interest on your savings or dividends from investments, government support payments etc.

Step 2: Identify Your Spending Patterns

Next you need to establish your current spending patterns. This step is more difficult than identifying your income sources and unless all of your spending is done electronically, it will take some time to complete. Basically you need to track your spending for at least a month to get a clear picture of where your money actually goes.

Step 3: Develop a Personal Balance Sheet

This step is about identifying your personal assets and liabilities, so that you can calculate your net worth.

Personal assets include your savings (including retirement savings), your home (if you are a home owner), personal vehicles, electronic equipment, jewelery, furniture and household goods, stocks and shares etc.

Personal liabilities include all forms of personal debt like mortgages, credit cards debts, personal loans etc.

Step 4: How About Some Situational Analysis

Does your financial situation look good or bad? Not sure? Time to take the information you have collected and do some analysis.

Step 5: Take Action

Some of the actions you can take immediately to improve your financial situation are:

• Eliminating any nonessential expenditure that were identified in Step 2, or
• Selling any unwanted assets identified in Step 3, and
• Using the cash you save or bring in from these two activities to eliminate some of the debt identified in Step 3.

What Now?

Once you have a clear idea of your financial situation (warts and all), you can begin to work on what you want instead!

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