Financial Assessment-Part 2
Part of your financial assessment has to include your income as well as your cost of living. This should be pretty easy for most of you because you can look at your paycheck stubs. Some of you may have (I hate this designation) unearned income from investments, and some may have rental as well as Social Security income. If you are self employed, please record just the net income from the business. We will use the same format we used to record cost of living expenditures.
Income Source Amount Frequency Annual Total
Salary 1 $_______ d-w-m-s-a-o $__________
Salary 2 $_______ d-w-m-s-a-o $__________
Salary 3 $_______ d-w-m-s-a-o $__________
Interest $_______ d-w-m-s-a-o $__________
Dividends $_______ d-w-m-s-a-o $__________
Capital Gains $_______ d-w-m-s-a-o $__________
Rental (net) Income $_______ d-w-m-s-a-o $__________
Social Security $_______ d-w-m-s-a-o $__________
Net Business Income $_______ d-w-m-s-a-o $__________
Other $_______ d-w-m-s-a-o $__________
Other $_______ d-w-m-s-a-o $__________
GRAND TOTAL. ……………………………………………………………………… $__________
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Last week I told you not to worry if your cost of living estimate did not equal your total gross income. Starting right away I want you to keep a diary of your living expenses. Every day I want you to write down how much you spent and for what it was spent. Just before you go to bed would be a good time. Get yourself a little notebook and use one page for each day. Be pretty specific in your description of what you spend your money for. At the end of the month I want you to categorize your expenditures and compare with your original estimate from last time. Use this new information to fine tune your earlier estimate. Continue recording your daily expenditures and fine tuning your cost of living expenditures for a couple more months. Then continue recording your expenditures every day for the rest of your life. No, I’m not kidding! Get in the habit. My little sweetheart (wife) has been doing this since she was 12 years old. She can tell you what the price of gum was in Lincoln, Nebraska in1963 and where was the best place to buy it. This kind of information is extremely valuable. You may want to begin using a computer spreadsheet or one of several accounting packages available such as Quicken.
The last item of information we need in order to properly assess your financial condition is what’s called a balance sheet. It’s a listing of all your stuff (accountants call this stuff “assets”). Then we make a listing of all the money you owe (called liabilities). When we subtract the liabilities from the assets, the answer is referred to as net worth. If your liabilities are greater than your assets, the net worth is a negative figure. The term used for this circumstance is “bankrupt” or insolvent. Just remember Phi 4:6-7……..”Be anxious for nothing……
Assets Current Market Value*
Cash………………………………………………………………… $__________
Checking accounts………………………………………………. $__________
Savings accounts……………………………………………..…… $__________
Money Market accounts……………………………………….. $__________
CDs…………………………………………………………………… $__________
Real Estate………………………………………………………….. $__________
Farmland……………………………………………………………. $__________
Home/Residence……………………………………………… $__________
Vacation Home(s)…………………………………………….. $__________
Automobile 1…………………………………………………….. $__________
Automobile 2…………………………………………………….. $__________
Automobile 3…………………………………………………….. $__________
Boats/personal Water Crafts……………………………….. $__________
RVs………………………………………………………………….. $__________
Planes**…………………………………………………………… $__________
Other expensive toys…………………………………………. $__________
Stock………………………………………………………………. $__________
Bonds…………………………………………………………….. $__________
Mutual Funds…………………………………………………. $__________
401K……………………………………………………………… $__________
403b………………………………………………………………. $__________
Cash Value of Life Insurance…………………………… $__________
Gold/Silver……………………………………………………… $__________
Art…………………………………………………………………. $__________
Antiques/Collectibles………………………………….. $__________
Other……………………………………………………………. $__________
Other……………………………………………………………. $__________
GRAND TOTAL…………………………………………. $__________
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* Current market value is what the item is worth today if you had to sell it. What would it bring at an auction today? Look on ebay for sales of similar items. Check the Kelley Blue Book or NADA for auto values. Ask a realtor friend what your house is worth today. Be conservative when estimating the value of assets.
** I left only enough space to list one airplane. If you need more space, just use one of the other lines and make a note explaining that this is the second plane.
Next time we will complete this exercise by listing liabilities, and then we will calculate your net worth. Are you excited yet???? Actually this is the Lord’s net worth entrusted to you.