Financial Health Assessment has
different approach to every individual. It may vary depending on his/her
perception. I want to share you the Five Important Windows to look over in
assessing your Health finances.
The first one you should check is your Income. You will ask here about
what kind of income do you have and how much your income. Do you know that
there are 2 kinds of income? One is Active
Income, and another is Passive
Income. Active income are the money that came from your hard work like your
salary.While Passive Income is an additional earnings that don't need your
effort like interest from your savings, from investment like mutual funds,
stock market that even when your sleeping your money is growing. About on how
much your income? The question here is, Is it enough for your daily expenses
and lifestyle that you have?
The second window you should look over is your Expenses. How do you balance
your expenses over your income? Do you prepare a monthly budget and able to
monitor it? Many of us forget the value of budgeting. We just sometimes missed
a small details of our expenses that eventually accumulate and then eat a huge
percentage of our salary. Example here is the purchases using credit card. When
there's a sale in the mall, usually we thought we save a huge bucks because we
got discount from an item we bought. From not being mindful to our acts the
result is, we are falling into manhole of debts that trap us for paying those
bills every month. Bad expenses hinders us in moving forward towards our
financial goal.
The third one is Liabilities.
Sounds unfamiliar? Liabilities from Mr. Robert Kiyosaki best selling author of
Rich Dad Poor Dad, is the things or properties we bought that take out money
from our pocket. We usually spend a lot of things that depreciate its value
overtime.Like gadgets,cars accessories, houses and some luxurious stuff that
are use for showing off.These things burden you in paying monthly bills,
maintenance, upgrades and rentals. As you take a look on your belongings now,
can you identify what liabilities you are unconsciously accumulating? And how
much the percentage it took in your income? Liabilities losses your power to
build wealth.
Speaking of wealth the fourth window is the Asset. In
contrast to liabilities. it is your properties that brings money in your pocket
as per Mr. Kiyosaki. Examples of assets are houses and cars for rental
purposes, rice fields that are productive and businesses gaining profits.
As you can see, having this things produce more additional income to you. Do
you have now assets that can provide your daily or monthly expenses? Do you
know how much is your total assets?
The fifth and the last one is Net Worth. This is the
important window among them all. This is the gauge to identify your Financial
status. Net Worth is the results of subtracting between your assets and
liabilities. It means the higher the net worth the wealthier you are. On the
other hand, the lower the net worth or badly if its negative the poorer you
are. It is a mirror on how well or worst you are in handling your finances
How will you rate yourself? Hopefully you'll learn here
through this simple illustration. See you on my next article!
P.S. If You want a guide in handling your
finances learn from Bo Sanchez, join Truly
Rich Club. To know more about it, click here.
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