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Born to be financially free

Analaura Luna

Life is a great big adventure, and honing your money planning skills is the key to making the most out of it. If you want to take control of the wheel and start heading toward financial freedom, there are two simple money management tools you need to use to make sure you’re going in the right direction.

‘Get your motor runnin’
Head out on the highway
Lookin’ for adventure
And whatever comes our way …’

There are some songs that have a real impact … and let’s be honest here: who hasn’t fought off the temptation to jump in the car, throw on a pair of sunnies and drive off into some fabulous, unplanned adventure with Steppenwolf’s classic Born to Be Wild belting out of the stereo?

The reason for this is simple – we ARE born to be wild, and somewhere deep inside everyone is the knowledge that life really is an adventure and since we only get to live it once, we want to have some fun and make the most of it.

But here’s the thing: acting on impulse and heading off on a totally spontaneous road trip does have its perils, because without a map there’s a good chance that your great adventure could end with you winding up lost in the back streets of suburbia. And the same is true with the adventure of life. You really can do anything, live without limitations and go wherever you want – but you’re going to need a good map to show you how to get to where you want to be!

Your financial GPS
Even with the best map in the world, it’s impossible to work out how to get to where you want to be unless you know where you’re starting from. And that’s where the statement of net worth comes in. This really simple money worksheet is kind of like a financial GPS – feed in the right information and it will tell you exactly where you are. The information you need to feed into your SNW is pretty simple, just a list of all of your assets and liabilities and their current worth. Once you’ve given it the right information, your SNW will show you exactly where you need to put the ‘You are here’ pin in your financial map.

But before you begin, there are some things you need to know to make sure that you’re giving your SNW the right information:

•   Your assets don’t include everything you own. For this purpose, the assets you list should only be things you could sell to cover your debts if you had to. So, ‘yes’ to any property, vehicles, shares, savings and superannuation, but ‘no’ to jewellery, furniture, appliances or art, because even if you wanted to sell them you’d be unlikely to be able to recover their full value.

•   Having said that, if you own jewellery, furniture or artworks that are collector’s items or antiques, which you have purchased as assets rather than possessions, these do need to be included.

•   Your liabilities include your mortgage, credit card and personal loan balances, as well as any other debts that you may have.

•   If you want your SNW to be accurate, make sure you get current valuations for your assets and up-to-date payout balances for your liabilities.

Your Financial Map
Now you know where you are, it’s time to create the map that will take you to the new and exciting places you want to be – and that means you need a money plan. Money planning is exciting, because it helps you decide exactly what you want to do with the money you earn – how much you want to spend, how much you want to save for the future, and how much you want to spend on doing something fun right now.

When you’re putting your money plan together you may find that you have what’s cheerfully described as ‘champagne tastes on a beer budget’ – that your expenses outweigh your income. While this can be a potential roadblock on your adventure, this is the point where you need to decide which detour you’re going to take; that is, whether you’re going to earn more or spend differently so that you can create balance between your income and expenses. The most important thing you need to remember here is that you control your money; it does not control you. You have the power to make different decisions to re-shape your money plan and map out your future.

So, make those decisions, set your course and get ready to hit the road on the greatest adventure of all – the one that will result in your financial freedom!

It’s easy to get your hands on all of the money worksheets and budget spreadsheet templates you need – just click here to see all of our money management tools and resources.

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Tags: money planning, money worksheets, money management, budget spreadsheet, money management

Author's Biography

Analaura Luna is an author, wealth adviser and founder of Your Family Your Money. Your Family Your Money’s goal is to simplify traditionally complex financial strategies, demystify financial jargon and debunk common financial myths, becoming every family’s first stop for financial advice, information and inspiration.