18 Feb Where are you now? Where are you going? When?
Since the first of the year we’ve been discussing the basics of creating a Cash Machine. Many of you have elected to join the conversation as well as talk one on one with one of my Action Strategists. I’ve heard some great ideas for start up businesses and I see that you’re taking steps to create plans for Cash Machines. I applaud all your efforts… keep up the good work.
For those of you with the right idea and a good sense of direction, now is the time to sit down to find out what you have to work with and where you want to go. It’s time to define your financial baseline. Your financial baseline is critical. In order to improve your finances and begin in wealth creation you have to know exactly where you are. If you haven’t done so already now is the time to create a financial filing cabinet.
There are 5 basic categories-
1.) Bank Statements, Credit Card Statements, and Cash Expenses
2.) Personal Expenses i.e. Utility Bills, Mobile Contracts, Internet, etc
3.) Insurance Policies (Home, Car, Health, and Life)
4.) College Funds for Children (if applicable)
5.) Investments Portfolios (Retirement Funds, Real Estate, etc.)
Now that you have everything in order, it’s time for you to do a personal profit and loss statement. This means calculate all the money that goes out (right down to the latte you still get every morning). Now calculate the money coming in from each source. Do they match up? Are you making a profit? Or are you living off borrowed money?
Once you’ve determined your profit and loss statement it’s time to complete a personal balance sheet to figure your net worth. This includes all your assets and liabilities. For example how much is your house worth versus how much you owe.
You should be doing this on a quarterly cycle to make sure your numbers are improving. If you have in business already you should be doing the same for your Cash Machine. Knowing your bottom line at all times will help you to make the right decisions on where your money is and where it should be going. This is your financial fingerprint. Be aware of it!
After you have all your facts straight, set your date with destiny. Name your financial freedom day. The most informed decisions can only occur when you understand the gap. The “gap” is defined by the space between where you are right now and where you want to be. Your financial freedom day is the day you design to be financially independent… for good.
Getting all your ducks in a row might be a daunting task. Things might be better or worse than you thought, but knowing is half the battle. In order to create true financial independence you need a jumping off point, then and only then, can you make a plan to create wealth.
P.S. Leave your comments or questions below…