DETROIT – The coronavirus pandemic has been really tough on a lot of people’s finances. Many people lost a job, had their hours reduced, or had to start their career over.
Local 4′s Business Editor and Certified Financial Planner Rod Meloni said this is an especially good time to step back and look at your personal finances with a new eye.
Taking control of your finances starts with doing some of the heavy lifting you’ve either put off or never have done before. Planning Alternatives Certified Financial Planner Nathan Mersereau believes knowing what you have is the stepping off point.
“Take inventory. Look at your cash flow. Look at your assets, what you own. Look at your liabilities, what you owe and start to set goals for 2021,” Mersereau said.
A beneficial thing you can do for your financial psychology is a net worth statement. You calculate it by adding up your assets and subtracting your liabilities.
Look at what you own and make a list. Use market values for a vehicle, a house, a boat, any life insurance, a 401K and other savings accounts.
Then list what you owe. On the vehicles, any debt including student loans and credit card debt. What you have leftover is your net worth.
“Even if you are living paycheck-to-paycheck, sitting down and looking at where the money is going is priority one because until you see what you have -- you have no way to control it,” Mersereau said. “Some people, on a monthly basis, look at where the money is going. Other people set some money aside. I’ve heard of even an envelope system to set money aside for cash needs that occur during the month. Either way is fine.”