Update your personal balance sheet….

The beginning of a new year is a great time to update your personal balance sheet. The exercise is invaluable in your personal financial planning as it creates a snapshot of your actual worth in relation to what you own and what you owe. Your so called “Net Worth”.

OWN – OWE = NET WORTH

All it takes is a sheet of paper with two columns listing the current value of all your assets on one side and your liabilities (the outstanding loans) on the other side. Subtracting the total liabilities from your total assets leaves you with a current value of what you are actually worth. This net worth provides you with a realistic view of how well to you are doing with your financial planning. If the figure is growing year on year then you are on the way to improving your wealth. If it is not growing you are effectively getting poorer.

Bear in mind that your net worth needs to improve above the inflation rate to keep its real value. So if inflation is running at 6% then your net worth should being improving above this rate year on year to keep your net worth value real.

Ways to improve your net worth are found in:

Reducing your liabilities Targeting your loans and getting rid of them sooner. Interest on debt is often higher than the returns found on investments. Especially, when one considers the risk needed to achieve the return. Paying off debt not only improves your net worth but also frees up more disposable income from the interest charged for you to invest more.

Acquiring growth assets Investments that grow consistently over time should be targeted. Especially, those which compound your growth. In other words, investments which produce returns which you reinvest, effectively buying up more. Compound interest is a magical phenomenon in the financial world and needs consistent positive returns over the longest possible time to make its magic.

Keep a close eye on your personal balance sheet. It is the starting block in towards financial freedom.

Listen to Paul's conversation with Sam and Africa below...


Recommended

by NEWSROOM AI

702 welcomes all comments that are constructive, contribute to discussions in a meaningful manner and take stories forward.

However, we will NOT condone the following:

  • Racism (including offensive comments based on ethnicity and nationality)
  • Sexism
  • Homophobia
  • Religious intolerance
  • Cyber bullying
  • Hate speech
  • Derogatory language
  • Comments inciting violence.

We ask that your comments remain relevant to the articles they appear on and do not include general banter or conversation as this dilutes the effectiveness of the comments section.

We strive to make the 702 community a safe and welcoming space for all.

702 reserves the right to: 1) remove any comments that do not follow the above guidelines; and, 2) ban users who repeatedly infringe the rules.

Should you find any comments upsetting or offensive you can also flag them and we will assess it against our guidelines.

702 is constantly reviewing its comments policy in order to create an environment conducive to constructive conversations.

Read More
'The Guernsey Literary & Potato Peel Pie Society film will leave you hooked'

'The Guernsey Literary & Potato Peel Pie Society film will leave you hooked'

Film reviewer Gayle Edmunds chats about 'The Guernsey Literary & Potato Peel Pie Society' film, and what movie-goers can expect.

[READ] Owner of CPT's YogaZone responds to racial claims made by yoga instructor

[READ] Owner of CPT's YogaZone responds to racial claims made by yoga instructor

Africa chats to the owner of YogaZone after a yoga teacher called in to speak about the racism she experienced from a co-worker.

Volunteer from Community Medics chats about how they are helping Capetonians

Volunteer from Community Medics chats about how they are helping Capetonians

Member of Community Medics Quinton Luck chats about the volunteer service & how they are helping Capetonians with medical assistance.

[LISTEN]Peer pressure can impact our relationship with money - Nola Raen, author

[LISTEN]Peer pressure can impact our relationship with money - Nola Raen, author

Author of Money Wit, Nola Raen says that people need to have the right information, to make the right financial decisions.

The new Mission: Impossible – Fallout movie was incredibly good says film critic

The new Mission: Impossible – Fallout movie was incredibly good says film critic

Film critic Gayle Edmunds shares her views of the Mission: Impossible – Fallout movie & comments on Cruise’s physique in the film

[LISTEN] Banning plastic bags is possible says Manager at SASSI Pavitray Pillay

[LISTEN] Banning plastic bags is possible says Manager at SASSI Pavitray Pillay

Manager at SASSI Pavitray Pillay chats about a plastic-free SA, and how businesses have responded to phasing out plastic.

Popular articles
Vigilante mob attacks alleged criminals in Daveyton

Vigilante mob attacks alleged criminals in Daveyton

Tensions are rife in the East Joburg township as the community attacked and killed criminals.

[WATCH] Dad uses a drone to pull out son's tooth

[WATCH] Dad uses a drone to pull out son's tooth

Khabazela shares YouTube videos gone viral including a barmaid hitting a colleague who slapped her rear during a routine.

'There is no way Magnus Malan could've done the things he is accused of'

'There is no way Magnus Malan could've done the things he is accused of'

Former police minister Adriaan Vlok has rejected accusations that former minister Malan was at the centre of a paedophile ring.

4 tips for safely investing right now when everything is so hectic

4 tips for safely investing right now when everything is so hectic

Bruce Whitfield asks Personal Financial Advisor Warren Ingram for advice on how investors can safely navigate this hectic time.

[Listen] Lottery responds to Tshepo's fraud claims

[Listen] Lottery responds to Tshepo's fraud claims

Philemon Letwaba says Tshepo's case relates to some of the issues that they are dealing with on a daily basis.

Castro bodyguard shares tales of dictator’s double life and breath-taking wealth

Castro bodyguard shares tales of dictator’s double life and breath-taking wealth

Juan Sanchez shares stories of Fidel Castro that’ll make you re-examine everything you thought you knew about the Cuban dictator.