Money Management Principle: Measure Your Money
Do you know the condition of your money?
“Be sure you know the condition of your flocks, give careful attention to your herds; for riches do not endure forever, and a crown is not secure for all generations. When the hay is removed and new growth appears and the grass from the hills is gathered in, the lambs will provide you with clothing, and the goats with the price of a field. You will have plenty of goats’ milk to feed your family and to nourish your female servants.” (Proverbs 27:23-27)
King Solomon told us we needed to know the value of our “flocks” in farming terms.
Today, you need to know the value of your “stocks” and your assets and liabilities.
It is important to track your finances. If you cannot measure it, you cannot manage it.
It is important to keep good records of your financial affairs.
Do you know what your monthly income earnings are?
Do you know where your hard-earned money is going?
It is important to budget.
Most people overestimate their wealth and underestimate their debt levels.
Do you know how much debt you have?
Do you know the value of your wealth portfolio?
Knowing your needs and what you have available to cover your expenses is vital to planning for the future.
You need to know what is happening with your money. Just like a small hole can sink a big ship, so a leak in your money management or a poor investment can cause great loss.
On the flip side, if you manage your money well and regularly monitor it, you can prevent loss and implement diversified strategies to build up your wealth portfolio.
What does your Wealth Portfolio look like?
There is a simple formula that you can use to work out the true value of your wealth portfolio:
ASSETS – LIABILITIES = NET WORTH
Put another way, your WEALTH PORTFOLIO is…
What you OWN less What you OWE = YOUR WEALTH PORTFOLIO
It’s important to know the condition of your financial affairs.
Work on your money management.
You need to know what is happening with your financial affairs.
If you want to build a WEALTH PORTFOLIO, you need to have a long-term plan to shrink your liabilities and grow your assets.
Are you measuring your money?
Are you keeping count?
