4. Map your Route
Big Mission: To help you create your very own roadmap to financial freedom.
Objectives:
To discover how much money you need.
To know your starting point - your net worth.
To create mile markers (goals).
Download and complete chapter 4 workbook.
Additional Resources
Use the Wants versus Needs Tracker
How much do you spend each month? What proportion of your money goes to wants versus needs?
Let's be clear. Your journey to financial freedom should be enjoyable. It's not about sacrificing all of your wants. It's about prioritizing. And it's about learning, and changing, your spending habits.
Do you love to dine out at restaurants? How much is it costing you each month? Or maybe you love buying new clothes, even though your closet is already full? Can you really afford those spending habits . . . if financial freedom is a priority?
To really get a good jump on your finances, look at your expenses. Here's an overview of how to complete the Wants versus Needs Tracker. Watch the video, make your own copy of the tracker, and complete it.
Make your own copy of the Google sheet here. Or copy and download the Excel version below.
Now look back at all of your expenses for the last month. What proportion of expenses did you spend on needs? How about wants? How do you feel about it?
Calculate your Net Worth
Your net worth is just a measure of your overall financial picture at a particular time. It's a simple calculation:
Net Worth = Assets - Liabilities
The great thing about net worth is that it can be tracked. You can watch it go up (and sometimes down) year after year. It's the best marker of your true wealth.
If you're young and carrying student loans, your net worth might be in the negative. As your pay down your debt and grow your income, your goal is to push that net worth into the positive zone. Keep building it up up, year after year.
Here's a quick video on how to calculate your net worth.
Now it's your turn!
Copy the net worth Google sheet here. Or copy and download the Excel spreadsheet below.
Collect your financial information and enter it into the sheet. How do you feel about your current net worth?