How the Wealthy Organize Their Finances
Wealth comes from producing money, organizing a plan for it, and then disbursing it via the organized plan in a way that the money returns back with more money. The problem is, there are so many opinions on how to organize financially that it becomes difficult to determine what to do and where to start. My article today will tell you how to stay organized financially. I help clients around the world handle their finances. My clients range from people who are just starting to realize they need wealth, all the way to people who make $20 million per year in revenue. We are going to talk about how to organize your income, assets, liabilities, and measure your financial health. My goal is to provide you with a free personal finance course. Click here to enroll in the course if you’re already eager to learn.
Know your income. Track your weekly and monthly income. You should know how much came in each week and month and be able to predict it for the future as well. Write down on a piece of paper at the very top, your monthly employment income and your spouse’s monthly income. This is the money you trade time for. Right below that, write down your passive income. This could be real estate, investments, small business profits, etc. This is different because it is generated by assets, and not from your time. Total all of this up and you’ll have your gross monthly income.
Know your expenses. You need to know how much money you spend. Total up all of your expenses. Start with housing, utilities, repairs, maintenance, phone, internet, groceries, leisure, clothing, education, childcare, insurance, debt, savings, investments, and taxes. There may be other things you spend money on, but this is the bulk of it. Keep in mind, you aren’t trying to build wealth by budgeting. You’re simply being responsible for your financial condition by knowing what you spent. Total all of these up and this what you spend per month. Subtract this from your gross monthly income and you’ll know your surplus/shortfall.
Know your assets. Assets are equity positions that pay you income. Total all of them up. Cash, retirement accounts, traditional investments, income real estate properties, life insurance cash values, health savings accounts, other investments, and business values. Notice your primary residence, raw land, and other “stuff” doesn’t get included in your assets. Those things do not make you any money so they are just “stuff”. You’ll make a separate category for “stuff” and include those items. Total all of your assets and you’ll know what you own in value that makes you money.
Know your liabilities. Total up everything you owe under the sun. All debts. Credit cards, car loans, lines of credit, medical debt, payments in collection, home mortgage, investment debt, tax debt, and all other personal debts. You need to know your total liabilities. You want the most recent total balance and it should be kept up to date. Subtract this total from your assets and you will get your total net worth.
Know your Net Worth. Net worth is assets minus liabilities. Notice, your “stuff” is not included in your net worth. Your home value, vehicle values, raw land, etc. are not included in your net worth. This is the top 1% wealth plan, not the middle class wealth plan. I do want to add, even though net worth is a cool number, it isn’t the end all of financial wealth. Unless you intend on selling everything, your net worth won’t do much for you. There are a number of other financial statistics that I will cover in another edition that are the real and true measure of your wealth.
If you follow these steps, you’ll know where you stand financially. By knowing where you stand financially, you’ll know where to go next. If you don’t have your money organized like this, you will have uncertainty and move slower. Speed is power when it comes to wealth. The ability to make the right decision and make it quick, will be vital to your wealth. Click here if you would like to enroll in the free personal finance course so that you can deep dive on this information to gain certainty with your finances.
Own Your Potential,
Grant Cardone Certified Coach
Jerry Fetta helps his clients make money, keep it, and multiply it.
He believes everyone should own their potential. He believes you were not created to spend 40+ hours per week serving the 40-year-to-life sentence trading your precious time for money just to live in mediocrity.
However, the truth is that time and money must be exchanged. It just doesn’t need to be you making the exchange.
Jerry helps his clients create wealth that exchanges time and money on their behalf.
His clients see a 30% increase in income, a guaranteed increase in savings rate, and 8-12% fixed annual returns on their assets in the 1st 90 days of working with him.
To get started, go to www.WealthDynamX.com/potential