You Are Here!
When using a GPS in your car to map out a road trip, you must have two pieces of information. 1) You must know your destination – or where you are going. 2) Equally as important as the first piece of information, you must know where you are now. What is your starting point? Without knowing your present position and your destination, there’s no way you can map a course.
Let’s look at it another way. You go into a shopping mall and you want to go to Macy’s. You find the mall directory that’s usually stationed at the main entrance. On the directory you find a little red star that says “You are here!” Only then can you figure out which direction to go to get to Macy’s. Otherwise, you might walk the wrong direction and be back out in the parking lot without ever locating the Macy’s store.
While this is true for mapping out a road trip and finding your way around the shopping mall, it is even more important when mapping out the journey for a successful financial future. (your money map)
Most People Are Just Hoping
In my career as a financial advisor, Scores of business owners who are successful and who seem to be on top of their game do not know exactly what is coming in and what is going out, more than 90% of people do not know where they stand with their finances.
This is equally true with individuals who are planning for their financial future. It’s surprising how few actually know what it takes for them to live, and how much cash flow is available. It’s important to know what is coming in and what is going out and what is being put away for the future in order create the most favorable conditions to reach your desired destination. In other words, you must know “where you are now.”
Most people have a little money tucked away in savings; some perhaps have done a little investing; others have an amount of social security they count on; still others may have a pension they know will be coming in. But none of the numbers are concrete. For the most part, they are just “hoping” that everything works out all right. The strategy – if you can call it that is as follows: “I’ve done a little here and a little there. Now I hope when I get to the time of financial need at some point in the future it will all come together for me.”
You need to bite the bullet and do the work it takes to create your Money Map now.
The first step to create your Money Map is to work on two important financial statements, your balance sheet and your Income Statement. These two statements will give you crucial numbers that show you your assets and liabilities, and more importantly your cash flow.
This work is not fun for most, and the reality is that most personality types will never do this exercise.
So, what do you do?
If the thought of working on financial statements makes your skin crawl it’s ok, there are people who love to do this kind of work. Many of my clients pay a bookkeeper as little as $100 a month to deliver current financial statements on a monthly basis. The important thing here is that to be successful financially, you need to know your numbers. Delegate the task if it is something that is not your strength.
Which is greater the price or the cost of not knowing your numbers?
Knowing your numbers will give you a clear picture that will put you ahead of over 90% of your peers, and will help you map out the path to your definition of a fulfilling financial future based on certainty not luck.