We know it is important to create and maintain financial statements. The balance sheet lists all assets with liabilities including a worth calculation (assets – liabilities) calculation and the cash flow statement lists all income with expenses including a net cash flow calculation (income – expenses) calculation. Three other important calculations include liquidity ratio (liquid assets/living expenses), debt-to income ratio (debt payments/income), and debt-to-asset ratio (liabilities/assets). Do you have your balance sheet and cash flow statement prepared for last year? Have you updated your financial statements for this year?
Preparing these documents is detailed work. Updating them regularly and continuously is less intensive but does require commitment. Based on cash flow and net worth analysis we can move forward to examine other prerequisites in the financial planning process. For example, we can establish investment goals. Common investment goals include accumulating retirement funds, enhancing income, saving for major expenditures, sheltering income from taxes. After establishing investment goals, we can adopt a written financial or investment plan. Then we can evaluate investment vehicles, select suitable investments, construct a diversified portfolio, and manage the portfolio. These are some of the money matters in my financial consulting, planning, and management practice. If you have any questions or concerns about your personal financial statements, then contact me.