How to Assess Your Financial Status!

         

  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 income that don't need your effort while sleeping its working for you, like earnings from your investment  mutual funds, stock market. 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.