Calculating your money position: So where do you start?

- Sometimes the hardest thing to do when you've had a setback is knowing where to start. Our goal here is to be able to set a baseline which you can use to improve your financial situation, and to do so with no guilt and no shame. A good baseline will consist of dollar figures for all the money matters for your household. You're going to need to go through all your bank and credit card statements. But to make it clear, make sure you break down your financial matters into these five categories. So, let's look at income and all sources of your income, which include work, any government support, any family support, any separate dependable income from one-offs. We want to see all of your income together. Now, look at expenses. Look at all your monthly expenses. Review your credit card and bank statements, but also account for the cash that you spend. Your income and expenses make up the cash flow of your household. We'll come back to that. Now, let's look at savings. This is any money you've put away for either short or long-term savings, including bank and retirement accounts. Now, look at assets. Assets are anything that you earn that can be converted to cash. Include any term deposits or investment accounts you have here. Now, let's look at debt. This is all the money you owe to someone else, including student loans, mortgages, car loans, and credit cards. Even money you may have borrowed from family or friends. The value of your savings and assets less the sum of your debt is your net worth. Now, this can be a scary number if you have a mortgage or a large student loan, but remember this number will change in the course of your life. These five pools of money determine where you are financially. The most important thing to do at this point is to get as detailed a picture as possible. The more work you do here, the better handle you'll have on your finances and better set up you are to take action. A member of my extended family, who will remain nameless, did this exercise. She didn't know that she was spending $800 a month on taxis and lunches until she had to sit down and account for the cash that she was taking out of an ATM every month. That's almost $10,000 that was missing from her annual expenses. Now, we all have financial behaviors that may not be the healthiest. I'm not going to minimize the fact that money is emotional, especially when times get rough. And sometimes you might need extra help with your feelings around money. My friend and collaborator, Amanda Clayman, has some great courses here on LinkedIn Learning. She's great at separating facts from feelings, so I recommend you spend some time there, starting with, "Financial Wellness: "Managing Your Personal Cash Flow" course. But, for now, take a deep breath and collect the information you need to determine your numbers. There's a few different ways to tackle this. See if your bank or credit union offers an app where you can share the data from your different accounts to get a full 360 degree view of your finances. You can also use Excel or even a notebook and pen. Look at these as just numbers. Black and white, no guilt, no judgment. This is your baseline and you can deal with what comes next, but, for now, get strength from knowing you're doing the right thing by taking action.