In these interesting and stressful economic times, self evaluation of one's financial situation is always merited. Many of us spend some analyzing investments strategies as part of our overall strategy to meet whatever goal you have set for yourself, whether that is retirement or the personal jet you would like to someday own. We spend a lot of time on our investments, analyzing company financials, strengths, weaknesses, buy and sell points. Depending upon how diligent your analysis, you may pour through significant amounts of financial data. Most of us closely review the balance sheet to understand the company snapshot of finances.
But a lot of us, while feeling good about our investment planning, let our personal finances slide a bit to the right. So the question is: Would You Invest In Yourself? It occurred to me that we can analyze our financial situation in a very similar manner that you would when analyzing your latest hot stock tip. We do not look at ourselves as profit centers, but in the end, that is exactly what we are. Your weekly income becomes revenue; your expenses are the cost of goods sold, and so on. In fact, I would propose that it would be an interesting task to lay your personal finances into a professional balance sheet. Essentially, when you apply for a large loan, this is what financial institutions do to assess the overall risk in lending. We rarely see, or think about this, but that is a major part of a loan evaluation. Put yourself to the test. It may be an interesting task that will very clearly outline areas that need your attention. Without going into the mechanics of a balance sheet, I can direct you to an example easily found on one. Google it. Check out any stock analysis section (Yahoo financial for individual company stock quotes will have this as an option when you call up the symbol). All of the categories in the balance sheet are applicable in some way. You may have to do some averaging, like for cash on hand, for instance. But otherwise, it is all there. Long and short term assets and liabilities, the implication of liquidity (generally short term is considered less than a year for liabilities). You will have to decide the value of your personal property...be careful not to place a high value on this. Remember, this is the amount that you would be able to sell on the open market, and one person's gold tends to be another person's junk.
At the end of the day, you will have a stunning snapshot of where you stand financially. Use it like an investor. Answer the question. If you determine that you would not invest in yourself after reviewing your balance sheet, take action to improve. You will know right where to start.
But a lot of us, while feeling good about our investment planning, let our personal finances slide a bit to the right. So the question is: Would You Invest In Yourself? It occurred to me that we can analyze our financial situation in a very similar manner that you would when analyzing your latest hot stock tip. We do not look at ourselves as profit centers, but in the end, that is exactly what we are. Your weekly income becomes revenue; your expenses are the cost of goods sold, and so on. In fact, I would propose that it would be an interesting task to lay your personal finances into a professional balance sheet. Essentially, when you apply for a large loan, this is what financial institutions do to assess the overall risk in lending. We rarely see, or think about this, but that is a major part of a loan evaluation. Put yourself to the test. It may be an interesting task that will very clearly outline areas that need your attention. Without going into the mechanics of a balance sheet, I can direct you to an example easily found on one. Google it. Check out any stock analysis section (Yahoo financial for individual company stock quotes will have this as an option when you call up the symbol). All of the categories in the balance sheet are applicable in some way. You may have to do some averaging, like for cash on hand, for instance. But otherwise, it is all there. Long and short term assets and liabilities, the implication of liquidity (generally short term is considered less than a year for liabilities). You will have to decide the value of your personal property...be careful not to place a high value on this. Remember, this is the amount that you would be able to sell on the open market, and one person's gold tends to be another person's junk.
At the end of the day, you will have a stunning snapshot of where you stand financially. Use it like an investor. Answer the question. If you determine that you would not invest in yourself after reviewing your balance sheet, take action to improve. You will know right where to start.
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