Establishing clear financial goals is the first and most important thing you should do when you’re doing a financial checkup. These goals will help you decide which “path” to take in your financial future.
Your financial health is just as important as your physical health so incorporating a regular wellness check on your personal finances is required in order to maintain the most accurate state of affairs. Consistent financial checkups enable you to determine what adjustments are required in order to stay in line with or exceed your economic goals.
A simple assessment reviews the following:
Subtracting your assets from your liabilities calculates your net worth. This assessment allows you to be clear about exactly what you currently own as opposed to what you currently owe. Thorough evaluation of your net worth will allow you to see how much debt to decrease and what assets to accumulate to offset any deficiency.
Calculating your debt to income ratio by dividing your debt payments into your monthly income. A favorable debt to income ratio is around 30% or lower, with 20% being ideal. Anything higher than 30% needs to be rectified as a higher ratio will adversely affect your credit scores and buying power by lowering your opportunities for credit and tradelines.
Setting clear short- and long-term financial goals can be challenging so here are a few steps I suggest you should consider to get your financial affairs in order.
*Create and follow a concise budget
*Take on side gigs to offset income
*Lower your mortgage and utility expenses
Your primary objective should be to increase your net worth by 5% to 7% or more, have a substantial emergency fund and ultimately build wealth so as to retire comfortably.
I am available to consult with you and your family about your financial planning and budgeting needs.
A balance sheet is a document that businesses can use to summarize their company’s financials which investors can then use to determine the value of a company. The sheet details a company’s assets and liabilities, along with the value of its stock. A balance sheet is also used in conjunction with other financial documents, like an income statement or a cash flow statement. Combining the insights of all three of these documents can help you determine whether your company is growing financially or experiencing a deficit.
A company releases its balance sheet to show its assets, liabilities, shareholder equity, as its financial information on a monthly or annual basis reflecting past, present, and future operations. Potential investors rely on the accuracy of these documents to consider if your company is viable to divest their funds. Balance sheets reflect at any given time how many assets the company owns, how much liability the company owes, and how much shareholder equity is available once liabilities are deducted from assets.
Assets include cash, investments, other tangible assets like intellectual property and are classified under current assets and tangible assets. Current assets include anything that can be converted into cash within one year, may involve cash, stocks, bonds, prepaid expenses, or physical inventory. Long term or fixed assets are utilized long term by the entity and may include property, buildings, furniture, vehicles, equipment, and machinery.
Liabilities reflect money that the company owes including taxes, loans, salaries, utilities, rent, or supplies. Liabilities are itemized as current liabilities and long-term liabilities on a balance sheet. Again, current liabilities include short term debts like accounts or notes payable. Long -Term liabilities reflects outstanding debts that are stretched out for periods longer than one year and can include amortization of bonds payable employee pensions, and other deferred compensations.
Shareholder equity simply reflects a clear picture of the company’s net income, net worth, and overall valuation. Positive shareholder equity numbers mean your company is retaining its earnings and will have something to offer an investor or equity partner in the form of returns.
A balance sheet can also be used to measure working capital, debt to equity, and liquidity ratios determining that the company has enough in cash and cash equivalents to pay its obligations and cover its operations.
If you are looking to get your company’s balance sheets in order, I am available to discuss your needs. Schedule an appointment at JeffreyLevine.Solutions today and follow me on Instagram @wealthbuilder_solutions.
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Good recordkeeping may be the most important task you can do to prevent you from incurring tax issues on your business. Records allow you to prove that you are eligible and entitled to listed deductions and expenses. There is no way to avoid proper recordkeeping
Canceled checks, daily receipts, and petty cash transactions make up the contents of a well-organized accounting ledger that has chronological journal entries and reflects every business-related transaction. Each original document should be saved to a hard drive to prevent confusion allowing for complete transparency. All the financial statements issued by any online bank should be printed and filed as original reference documents, as well as all employee payroll expenses.
Financial records should be kept for no less than 4 years and employee records for no less than 7 years. If any property is involved, keep all records even after you sell the property as often times there can be post-sale occurrences that render a property owner to reference related documents.
If you have not already been keeping accurate records, start today. The IRS and your state demand that any business pays their fair share of taxes, however business owners are entitled to certain deductions and refunds so correct and accurate records are essential to claim the benefits you are owed.
If you think you need assistance organizing your books I am happy to provide a 20-minute free consultation to discuss your recordkeeping financial planning, wealth management, and exit strategy requirements.
Schedule your consultation at JeffreyLevine.Solutions and follow me on Instagram @Wealthbuilder_solutions for more insights and motivational mantras related to wealth-building strategies.
Estate Planning is a very sensitive topic that most families avoid discussing until it is almost too late. This subject is critical if you have any intentions on leaving your assets to your loved ones. Having an established estate plan ensures a smooth distribution of your assets and eliminates confusion among benefactors
There are four primary elements of an estate plan include a will or living will, a healthcare power of attorney, a financial power of attorney, and a trust.
Last Will and Testament
If you do not have a will then your assets go to probate and the state in which you reside distribute your assets based on the state’s law. A will identifies who receives your assets upon passing. It is important to discuss the objectives of your will with your heirs to reduce confusion. It is also imperative if you have significant life changes like a divorce, guardianship issues, or a change in assets to change the contents of the will in a timely matter.
Healthcare Power of Attorney and Living Will
An (HPOA) healthcare power of attorney is a signed legal document naming a trusted individual to make decisions on behalf of you if you can’t make decisions for yourself in a health-related emergency like incapacitation or terminal illness. The living will or advanced medical directive outlines your choices regarding life support and medical interventions. These documents should accompany the last will and testament.
Financial Power of Attorney
A financial power of attorney defines who you prefer to make financial decisions on your behalf should you become incapacitated. This document allows the designee to handle your financial affairs like paying your bills or handling your investment matters. This document should also accompany your will.
A trust is a legal entity that can own your assets (while living or dead) controlled based on your stipulations and determinations. There are several advantages to having a trust as you ultimately will still control the management of your assets well after your death ensuring the proper usage in consideration of applicable circumstances. Trusts can be set up at any time of your life and should be updated regularly to account for additional assets and beneficiary requirements.
Estate Planning Is Essential Business
There are many other elements that encompass an estate plan and these are just 4 basic but essential components. If your estate planning is not in order, now would be the time to start taking this subject seriously. I am of service to help you with financial planning or wealth management decisions and look forward to speaking to you regarding your unique requirements. Set an appointment at JeffreyLevine.Solutions today for your free 20-minute consultation.
To calculate your net worth, add up all of the assets you own and subtract all of the liabilities or debts you owe. Net worth includes tangible assets such as your home and cars, investments, and money you have in savings, as well as certain other items of value.
Are assets net worth?
Assets are possessions that could be sold or converted into cash easily. The valuation of assets should be realistic in order to reach precise net worth estimates.
How much should my net worth be?
There is no way to answer that, but the bottom line is that your net worth should increase over time. As your assets increases and your decrease debts, net worth should increase consistently.
Are income and net worth the same?
Income is all the taxable income and wages earned from working and is most often the primary source of wealth creation but not equal to income. Generating income does not always lead to wealth creation so it is not the main determinant of net worth. Wealth is the net worth of a household versus income which is what is reported on a tax return.
Building net worth is not about how money income you make, or about how much money you spend, but how much you can keep.
To learn more about ways to increase your net worth set an appointment over at JeffreyLevine.Solutions, follow me on Instagram @wealthbuilder_solutions, or on Facebook @J L Wealth Solutions page to get more insights and tidbits related to building your financial knowledge.
Your financial health is just as important as your physical health so incorporating a regular wellness check on your finances is required in order to maintain the most accurate state of economic affairs. Consistent financial checkups enable us to determine what adjustments are required in order to stay in line with or exceed our economic goals.
Let’s outline the steps in a simple assessment:
Calculate Your Net Worth
Identify your net worth by subtracting your assets from your liabilities. This allows you to understand exactly what you currently own as opposed to what you currently owe. Don’t be alarmed if your net worth appears as a negative number. The point of this exercise is to show you how to reach the positive end of the spectrum.
Your primary objective should be to increase your net worth by at least 5% to 7% per month so evaluating your net worth will allow you to see how much debt to decrease and what assets to accumulate to offset the deficiency.
Identify Debt to Income Ratio
The next step would be to calculate your debt to income ratio by dividing the total of your monthly debt payments into your monthly income. A favorable debt to income ratio is around 30% or lower, with 20% being ideal. Anything higher than 30% needs to be rectified, as a higher ratio can adversely affect your credit scores and buying power by lowering your opportunities for credit and tradelines.
Setting clear short- and long-term financial goals can be challenging so armed with this new information here are three steps I suggest you consider to get yourself either on track or ahead of the game.
1. Create and follow a clear-cut budget.
Whatever you decide is best, make sure it is in a written plan so you can hold yourself accountable for your financial accomplishments and failures. Account for your current and projected income and expenses while setting benchmarks with deadlines that are measurable. Concise budgeting will also help you understand productivity and time variations allowing you to understand how valuable your time is and how to use it wisely.
2. Get a side hustle.
Everyone has a talent that someone else wants to learn. The virtual era has unlimited possibilities open for those who want to teach a class, showcase a product, or promote their services. Just by dedicating a couple of hours a day into this action will make it much easier to reduce or eliminate debt by incorporating additional income streams that you can save or invest.
3. Lower your mortgage payment
Many homes are over-assessed so having your local tax authority reassess your home could save you at least 10% or more every month. You can also find out if your property qualifies to cancel the private mortgage insurance and if you really feel you can’t afford to pay talk to your lender about a loan modification. A loan modification may decrease your monthly loan amount, but increase any balloon payments or the terms on your loan, so do all of your research before accepting any agreements related to your property.
You should be intimately aware of where every dollar is coming from and going to. There are plenty of online tools that can be of great assistance to you or you can reach out to me and I can help you to coordinate your financial objectives. I can help you to evaluate your risk tolerance, study funds that support your goals and values or simply consult you to determine the most viable options to handle your current financial situation.
Schedule an appointment to assess your finances today at JeffreyLevine.Solutions to get on the road to wealth building and financial freedom.