Welcome to Day 1: Financial Inventory
Before you begin your hustle towards financial freedom, you need to first know exactly where you stand with money. That’s why today is all about taking an inventory of your finances, all the way down to the cents.
The purpose of a financial inventory is to establish a foundation, or starting point, to financial freedom. It is pretty much impossible to establish a savings goal, a budget, or any repayment plans if you aren’t sure exactly how much money you make each month. That’s why you need to be aware of every dollar you bring in and every dollar you owe.
For some, this might be really easy. For others, it could be one of the most difficult days in this course. The reason this can be difficult is because looking at your finances means being 100% honest with yourself about your current financial situation.
During your inventory, there is a chance that you don’t like what you find. However, your honesty is what makes this a vital step to your success.
Once you face the reality of your current financial state, you can start developing a plan that will lead you to financial freedom.
With that said, today’s inventory will be divided into three categories: monthly income, monthly bills, and overall debt.
Let’s do this!
Simply put, your monthly income is how much net income you bring in during a single month. This includes your full-time job, any part-time jobs, income from a side hustle, government-based checks, etc.
It is so important to be honest about the amount of money you actually make in a single month. If at times you are uncertain about how much you make in a month, don’t overshoot it. It helps to be on the conservative side. For salary workers, it’s easier to calculate your monthly income. For hourly workers, this is more of an educated guess. Make sure you’re as accurate and realistic as possible.
When you have this number, write it down in your phone or somewhere you won’t lose it.
Here is where things start to get, well, less fun. Bills. We all have them. We all hate them. But, we all have to face them.
Start by compiling a list of all your fixed monthly bills. When listing all your bills, it’s vital to remember everything. To make this easier, check your online banking statements from the past few months to see exactly what reoccurring bills you have. Here is a list of potential monthly bills:
- Car payment
- Car insurance
- Health insurance
- Child Support
It’s also good to add in additional monthly expenses that aren’t necessarily “bills”, but are guaranteed monthly costs. This includes:
- Pet food
Don’t worry about putting the amount you spend on your bills. We will tackle that tomorrow.
Debt. We might want to ignore it, but we shouldn’t. It’s time to take inventory of all your debt so that you can start to tackle it. Here are the most common debts:
- Credit card(s)
- Car loans
- Student loans
- Medical bills
- Personal loans
Again, don’t worry about putting the amount you spend on your bills. We will tackle that tomorrow.
Once you have completed your financial inventory, you will have a clear picture of what your monthly finances look like. This might not have been easy for you to do, but hopefully, it was eye-opening.
Tomorrow, we dive into your spending habits. I’ll see you then!
THE LIFE HUNT
Hi, I’m Alyssa Hunt. A few years back I decided that I don’t want my money to control me, I want to be in control of my money. That’s why I’m committed to creating a lifestyle that allows me to be my own boss and have the freedom to travel the world. So, I’m mastering my finances while building multiple streams of income, and I want to help you do the same. Join me and let’s succeed together. MORE