The financial snapshot. It’s a new trend, baby! Okay, maybe not… At least not yet… But if it were, I guarantee that people would be in a MUCH better shape these days. If you know where your money’s coming from and going to, you’re going to make much smarter financial decisions.
So what, exactly, is this “Financial Snapshot“? According to The Dictionary of J.:
Financial Snapshot [fi-nan-shuhl snap-shot] noun: A spreadsheet that lists all of your debts, all of your savings, your net worth, and most importantly your budget – all in one spot!
A real-life snapshot
Check out my own financial snapshot. It gets updated a couple of times a month, and makes my life a helluva lot easier. You’re more than welcome to download the blank template (xls) and play around with it. I like using Google Docs for accessibility, but you can use pretty much any program as long as stick with it.
Now, for the sake of keeping this short (and not boring you to death), I’ve listed a few easy steps below just to get you started. Whether or not you keep reading, just remember that the main point here is to have a clear understanding of your financial situation. That’s it! Once you’ve gotten a firm grasp on that, it’s all downhill, my friend.
- Get your mind right. Let’s face it, if you’re not in the mood to talk finance and get all budgety, it’s just not gonna happen. We’re all human, and if we don’t wanna do something, then we usually don’t do it. Unfortunately, organizing your finances is usually one of those things you don’t wanna do. But if you set aside little bits of time, and update thing when the mood is right, you’ll find that it goes much more smoothly.
- Start with the quick and easy stuff. If you take a look at the template, you’ll see there’s room for all sorts of numbers to fill out (don’t worry, once you do it the first time, it gets much quicker). The easiest place to start (in my opinion) is with your credit card balances and income. You can easily get this info by logging into your accounts and copying/pasting these numbers over.
- Tackle your “net worth.” Your net worth is basically all of your assets minus all of your liabilities. So things like savings, 401(k) accounts, Roth IRAs, stocks, bonds, etc. all get recorded in the assets department. Then we put things like credit card debt, loans, etc. in the liability section. Gather it all up and record the info in the right spots to find out your net worth. And remember, there are no right or wrong answers here – just the facts.
- Create a simple budget. This is my favorite part. Go back a month or two and track down where all your money went. Look at your checking accounts, savings accounts, credit cards, etc. Add everything up by category (e.g., mortgage, cable TV, food, etc.), and then divide by the number of months you’ve tracked. This will give you a solid estimate of how much you’re spending in each category on a monthly basis.
Now, plop these numbers into your spreadsheet, and voÃla… You’ve got yourself a budget! I always advise keeping the numbers intact for the first month (or pay period, or whatever length you want to budget for) so that you can get used to balancing it. But after a month or so, start chopping away at the numbers and challenge yourself to spend even less! You’ll be amazed at what you can accomplish once you have a game plan in action.
So that’s it my friends – the “Financial Snapshot” as your boy J. Money sees it. As with everything in life, it’ll take a bit of work to get things rolling, but… If you stay on top of things and keep your head up, you’ll have no else where to go than up!
Ya just gotta start baby…