Before creating your monthly budget, it’s always helpful to have a good sense of where you stand overall with your personal finances. Many times, families have a sense that they have “a little too much” on their credit cards. But this vague sense of a problem is often not enough to trigger real action. On the other hand, when families realize their net worth is minus $25,000, they begin to develop a real sense of urgency to change their financial habits.
As a first step, you must list all of your assets and all of your liabilities. Develop the habit of doing this inventory regularly—at least once a month at the beginning. Soon, you will begin to have a very accurate idea of where your money is and how you are spending it.
Drew Kessler is Vice President of Marketing & Communications with the National Foundation for Credit Counseling.
Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.