For many of you, you have no idea where you are sitting financially. Some of you are living pay check to pay check. Some of you are sitting on a bunch of cash and are unsure what to do with it. Some of you haven’t checked your accounts in months and are just basing your financial situation on your current amount in your bank account and trying to make sure there is enough to make the minimum payments and to make ends meet. You need to figure out where you are at. You can’t know where you’re going if you don’t know where you’re at. You need to start tracking your money.

There are many ways to do this, depending on how you like to organize things. You can write it down on paper, you can put it in a spreadsheet or you can track it on an app. I am a habitual tracker. I track my diet, my workouts, my habits, my finances and pretty much any activity I can track. I believe it is the best way to guarantee success in anything I do. There are different ways to do this. I personally use and recommend YNAB (You Need A Budget) to track my finances. After about 10 minutes, you’ll have a clear picture of your finances. We will also use this as a tracking tool later on.

Where you are at – Calculating your Net Worth

 Basic personal finance comes down to Assets vs Debts. Assets are anything you own that has value, any money that you currently have and any money in investment accounts. Debts are anything that you owe. Credit cards, mortgages, car payments, and loans are all examples of debts. Let’s start by figuring out your assets. If you’re not at all technologically savvy and don’t want to use an app/website like YNAB, grab a pen and paper.

Assets – Debts = Your Net Worth

Assets:

Step 1: Make a list of all your accounts. Your chequing accounts, your savings accounts, any retirement accounts/pensions

(For Canadians – RRSP’s, TFSA’s, RESP’s, etc)

(For Americans – 401k’s, 403b’s, Roth IRA’s, etc).

Step 2: Make a list of the major items that you own, such as your house and vehicles and write down their current value or at least their estimated current value.

Step 3: Add up all of these accounts and items. These are your total Assets.

Debts:

Step 1: Make a list of all of your debts. Your mortgage, your credit card balances and any loans (student loans, car payments, personal loans, etc)

Step 2: Add up all of these debt amounts. These are your total Debts.

 I prefer to use YNAB and highly recommend doing it this way because these numbers are always changing and it is beneficial to be able to pull up the website or the app to see where I’m at and how I am progressing. These numbers are constantly changing and it can be super motivating to see this number grow, even by a few dollars at a time. This is your progress gauge. This number will tell you if what you’re doing is working or if you need to make changes. Now that I’ve been doing this for years, I maybe check my net worth every month or two. I remember at the start, I was checking it at least weekly, if not daily.

Whatever your current net worth is, know that from this day forward, you have the power to make it grow. It may be in the negative, which means that you owe more than you own. Fret not. You will climb out of that hole. It doesn’t happen overnight. It doesn’t matter how old you are, how educated you are, how much money you make, or how hard life is right now. At the end of the day, it will be up to you to make changes in your life to grow that number. Like I said before, it’s not hard. What’s hard is to change your habits, stay consistent and pick yourself back up when you fail.

Why is that number so important? Why should you care? This sounds hard. Why not quit?

Find your why

Let’s get serious here and dive deep. Why do you want to improve your financial situation? Why is it important to you? You need to figure this out before moving on. It all starts with your why. Your why could be many things. It can be one thing. My why is probably different than your why. Your why can be whatever it is that is motivating you to be better, to do better, to improve your financial situation and in turn, improve your life. It can be that you want to give your kids the things you never had growing up. It can be that you are tired of living pay check to pay check, wondering if there will be enough at the end of the month. It can be that you want that truck, that house, or nice clothes. It can be that you want to support your aging parents, who never learned these lessons and are in a bad place financially in their retirement. It can be that you want to travel the world. Whatever it is, figure it out, write it down and look at it anytime you are lacking motivation or feel like you’re slipping. Anytime that enemy inside is starting to creep closer to winning. Read it and get back on track. It’s never too late.

When it comes to money, my why is this. I never want money to be a stress in my life or my families lives ever again. I won’t let it. I never want money (or lack thereof) to be a reason I make a bad choice, why I can’t do something I want to do, or why I’m forced to do something I don’t want to do. Call it whatever you’d like. Financial freedom. Financial independence. Financial peace. Money will not control me. I will control my financial situation. I will tell my money what to do and where to go. I am the master of my money. Money will not keep me up at night. I also want to set a good example for my children. 

My mindset is that money exists to help bring me joy and to allow me to experience things that interest me. Money exists to take care of my family. Money exists to help others in need. It is not about greed or power. It is making the conscious decision that I alone am responsible for creating the life that I want. Personal finance is only one part of this, but it’s similar to other important things in my life. Fitness, health, music, and relationships are all important to me in their own way. But none of these things just improve on their own. They all take work, focus, discipline and determination. Working and focusing on the things that are important to you is what makes life worth living. This is my why.

If you enjoyed this article, please check out my book The Daily Mission. Part 3 of the book is devoted entirely to Personal Finance. It provides the basics you need to win with money, while cutting out all the boring financial talk.