Growing Your Personal Wealth – the Next Step

(This is the second of a five part series of articles showing you how to move towards financial freedom)



Taking Stock



Before we can effectively do anything to take control over our finances we need to take stock, to know where we stand now.



Make a list of all your assets and liabilities. You must write them down.



What do you own?

List out only the saleable items, and against each item note the price that you would get if you were to sell it now. Do not take the price that you paid for them. What would they fetch today?



Now list out your liabilities. What do you owe? Do you have loans from banks/financial institutions? Have you borrowed from your employer, from your friends and relatives? Do you have unpaid bills and credit card payments?



Now to the test.

Add up your assets and your liabilities separately.

If you owe more than you own, your finances are in bad shape. You need to move urgently to take control of your money matters, or face disaster.



If your assets and your liabilities are more or less equal, it is still not time to breathe a sigh of relief. Because, in general, your assets will fall in value over time while your liabilities will increase (interest and other charges) with time.



Now to the real test.

List out the current value of your liquid assets – things that can be changed into cash in a couple of weeks, or a month at the maximum. Will this amount

cover your usual expenses for at least the next three months? In case you fall ill, or meet with an accident that keeps you from earning, or your employer "right sizes" you, can your liquid assets keep your family going for three months?

If not, your finances need your immediate attention.



This test of "liquidity" is what I would personally recommend as the most important step to each one of you setting out on the path to financial freedom.



Please take stock of your finances, now.