The Modern Couple's Money Guide. Lesley-Anne Scorgie

Чтение книги онлайн.

СКАЧАТЬ Gretta and Tom, she can afford her lifestyle. According to my Aunt Marian, not living how rich people “should” live, with expensive material possessions that don’t build wealth, has been critical to her financial success.

      If you’re guilty of keeping up with the Joneses, you now have a choice — to live like a millionaire or actually be one. And along your journey to building your net worth together, just remember — the Joneses are broke.

      Why Bother Tracking Net Worth?

      Building your net worth starts with understanding where you are today. Your net worth is the number that we will focus on growing throughout this book. When you know where you are starting from, you can plan where you want to go. It’s kind of like hopping on that dreaded scale in your bathroom to see how much you weigh. If the number disappoints you, then you make plans to change your fitness regimen and diet. Every week you weigh in to see your progress relative to where you started. If you find your weight heading in the opposite direction of where you want it to go, you can quickly course correct.

      The same concept applies to tracking net worth. Today you might jump on the net-worth scale and be disappointed about where you are, like Gretta and Tom, and see that significant changes to your financial behaviours are required. Or you might weigh in and discover that you’re satisfied with your net worth, and you simply need to keep up your regular financial-fitness regimen. On the opposite end of the spectrum from Gretta and Tom is my friend Sean, who paid off his mortgage in three years by sacrificing just about everything. Sean’s net worth is high, but at the expense of furniture, worldly experiences, and relationships. His house and heart are empty and he’ll need to make changes to his ultra-frugal financial habits to fill those voids.

      The point is, when you take an honest look at your net-worth scale today, you can create a plan to grow your net worth through two actions. First, reduce debt like your car loan, mortgage, and credit card balances, and second, grow assets like your house, investments, or business.

      When you know where you are starting from, you can plan where you want to go.

      Did you know that people who track their net worth either on paper, with an app, or by way of a spreadsheet make greater progress on their money than those who do not? That’s because tracking your net worth adds an important layer of accountability to your net-worth goals. It forces you to face the financial music that you and your partner have created.

      In his book What They Don’t Teach You at Harvard Business School, Mark McCormack references a 1979 study on setting goals conducted with Harvard MBA students. Students were asked, “Have you set clear, written goals for your future and made plans to accomplish them?” At the time of the study, researchers found that 3 percent of the participants had clear, written goals, 13 percent had unwritten goals, and 84 percent had no specific goals. Ten years later, people with unwritten goals earned twice as much as those without any goals at all. Individuals with clear, written goals earned 10 times as much the other two groups combined!

      When you track your net worth, you’re more likely to accomplish the goals you’ve set to grow it. And if something goes off track, you can take immediate action to correct the situation.

      Jump on It

      Ready to jump on the net-worth scale? Let’s go!

      If you’re a busy person, or if you’re using more than a simple bank account, keeping track of your money can be challenging. Many people have more than one bank or investment account, loan, credit card, or debit card. And when you layer on the fact that people often use multiple banks, passwords, and advisers, it’s even more confusing. Wade through it by laying all your most-recent financial statements — either electronic ones that you’ve printed out or the hard copies you’ve received in the mail — on your kitchen countertop. Also sign into your accounts online so you can have your current balances on hand. It also makes sense to open up your wallet and lay your debit, credit, and store cards on the table just so you’re not forgetting anything. Common statements include:

       Bank statements

       Mortgage statements/property value assessments

       Investment statements (from your bank, your RRSP, TFSA, or non-registered accounts)

       Credit card bills

       Loan and line of credit statements

       Pension statements

       IOUs (a rundown, handwritten if necessary, of money you owe to friends or family or that they owe you)

      Once you have gathered your statements, begin inputting this information into a net-worth tracking tool. Not into designing your own spreadsheet? No problem, use Patrick and Morgan’s Net-Worth Tracker (see opposite page) as a template. If you’re uncertain which category to put a statement balance in, simply ask yourself this question: Do I need to repay this money? If the answer is yes, that balance is a liability.

      Pay stubs, utility bills, and invoices for income are excluded from your net-worth calculation. They are used when budgeting instead (see page 48). Liabilities are different from bills in that liabilities are borrowed funds that must be repaid. Bills are paid monthly for goods or services — like your Internet or cable television service — delivered to you in a certain time frame. Bills should not be carried forward, whereas many liabilities, such as car loans and mortgages, are set up as regular payments over the course of many months. When a credit card balance isn’t paid off every month, it becomes a liability rather than a regular monthly bill. (A budget tool can be used to track monthly bills and income. Budgets and tracking monthly expenses are discussed in chapter 3, Scrap Your Emotions and Sort Out Your Accounts, and chapter 4, Curb Overspending.) Assets, on the other hand, are owned by you and grow in value.

      Tracking your net worth is a simple four-step process.

      Step 1: Start by marking the date at the top of your spreadsheet.

      Step 2: Record each asset or liability and its value.

      Step 3: Add up your assets and liabilities.

      Step 4: Subtract your total liabilities from your total assets, and voila — that’s your current net worth.

      Let’s take Patrick and Morgan, both 45 years old, as an example. They own a home valued at $550,000 and have a mortgage of $315,000. Last year they did a renovation and financed it through a home equity line of credit, which has a balance of $40,000. Patrick has an RRSP through work and Morgan has a defined contribution pension plan through her employer. Patrick’s RRSP is valued at $60,000 and Morgan’s pension is worth $50,000. They have three children and a Registered Education Savings Plan (RESP) valued at $45,000. The couple struggles to pay off their credit card balances, which total $6,000 split evenly between two cards, every month. Patrick and Morgan’s current net worth tallies to $344,000 when their total liabilities are subtracted from their assets.

      Sometimes people don’t have any assets or any liabilities. If that’s you, simply put “0” as the value in the applicable category. If you don’t know the exact value of an asset, like your home or a collector’s item, you’ll want to have an assessment done or do market research on comparable offerings. Sometimes your hard-copy bank or investment statements won’t have the exact current value of an asset either. Simply call the institution where your bank account or investments are held and inquire about the current balance or check online.

      Now it’s your turn to try it. Work through СКАЧАТЬ