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One of the best tools for this is a personal financial statement listing all the relevant information.
What Are Financial Statements?
Personal financial statements will generally be broken down into a balance sheet and an income statement.
Reviewing that information lets you learn what to expect of your financial health, meaning where you stand financially.
This is the amount left over after subtracting your liabilities from your assets.
Expressed as a formula, it would be assets liabilities= total net worth.
If this turns out to be a negative number, dont panic (and youre not alone).
The formula for this would be income expenses= net income.
Gather Your Financial Documents
Youll need to get all those numbers from somewhere.
List assets, including their market value, and how much you owe in liabilities with brief descriptions.
This will help you understand where your money comes from and how youre spending it.
5. Review and Adjust
Next, review your net income.
If its negative, youll need to find a way to cut expenses or increase income.
If youre making more money than youre spending, review your assets and liabilities.
you could use it to see where you might be overspending or to find opportunities to save more.
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