Today, I want to spend time on one of my recommended financial to-do list items. See this post on the list of financial things to do before the end of the year. The financial statement is one of the most important documents you will develop on your road to being a Millionaire Nurse.
What is a financial statement? A financial statement, for you medical types, would be similar to an intake assessment on a new patient. It is a snapshot of your current financial health. Your financial statement is often required by banks to decide your eligibility for a loan, in addition to copies of tax returns, and other financial documents.
So how do you come up with a financial statement?
Well, first you need to do a little basic research. You need to make a list of the things you own, that has real value. I suggest starting from large to small. For most homeowners, this would be the value of your home, (real value not imagined). A realistic value is obtained by seeing what homes have sold for recently in your neighborhood, and comparing your home to those. Bank of America has a webpage that you can plug-in an address, and it will search a database for homes sold in the neighborhood. Zillow is also a real estate information site that has a database on much of the home sales in the country.
Be as accurate as possible in these estimates so that you don’t get a false sense of security regarding your financial prowess. It will only hurt you. Make sure you are comparing apples to apples. If the only home that has sold was twice the size of yours, and 5 years newer, make adjustments. You also may have a Realtor friend who could give you a good faith guestimate of what your home may sell for in today’s market.
Do the same with the next most valuable thing you own-usually a car, although an RV would also qualify. Determine the value of your cars, at Kelley Blue Book. Home furnishings’ value, is one of the more difficult things to decide, and unless you have a lot of valuable antiques, just a guess will be ok. Remember, if something happened to you and your heirs sold your stuff-the likelihood of that comfortable recliner selling for more than a few bucks is slim. On the other hand, if part of the reason you are in financial trouble, is you just bought a 52 inch plasma with all the bells and whistle’s, then adding that to the list is very important. Check Craig’s list for similar items.
So basically list your stuff, the balance in your retirement account, savings, IRA’s on your financial statement. All these items, in accounting terms, are your asset’s.
Once you finish listing your assets, then it is time to list your liabilities. No, this is not like liability when it comes to medical malpractice or whether you are liable to yell at your charge nurse tomorrow, when she decides you need to work Christmas…..
This term, liabilities, is what you owe on the list of things described above. So if you have $120,000 balance left on your mortgage, write it down. If you owe 15 grand on your Prius, write it down. If you have a 10,000 dollar balance on the jet ski or credit cards, write it down-get it all out on the table. You will feel better-well, maybe you won’t feel better, but let’s be honest here….
So, when you have finished adding the value of all your assets, and then subtract from the total value of assets your liabilities, then you have the magic number-ta-daaaaaa-YOUR NET WORTH.
No this net worth is not a judgment on you as a person, although most bankers would disagree. It is an indication of where you stand financially.
For example, if you have a negative net worth, say of minus $150,000 but you are just out of school, bought a house, have student loans, and a car note, and just starting that new job on the night shift, in the ER, maybe that is ok. You know where you are, now make a plan on what to do to change it.
However, if your net worth, is that same minus $150,000 and you are a year away from retirement, you are screwed-well at least in a world of hurt about enjoying that retirement. And boy are you in the right place- keep reading -we will help you here.
One other value of determining your net worth, is using the number to follow your progress (or not) from year to year. It is a great feeling, after working hard on improving your financial situation, to see your net worth grow!
So, before the end of the year, do the work described above to find your net worth. It may jump start you into taking care of,- and paying more attention to- your personal finances.
That is where “The Millionaire Nurse” comes in-go sign up for my FREE e-book on “Emergency Money Resuscitation”
I also will be announcing the arrival and how to order my new book “The Millionaire Nurse” soon as well.
