Know Your Numbers
On this episode of Financially Naked: Stories from The Financial Gym, hosts Tina and Sam, two Certified Financial Trainers, talk about getting familiar with your finances starting with knowing your numbers. They explain net worth, what numbers to track regularly, and how to create a sustainable budget. Whether you're a Financial Gym client or just starting to take control of your money, Sam and Tina give advice to help you approach your finances with confidence and clarity.
Podcast Notes
Understanding Your Numbers
When you work with a Financial Trainer, it starts with the financially naked’ session. To prepare for that session, you gather all of your numbers. This helps you and your Trainer fully understand where your current financial standing.
Knowing your numbers, even if you aren’t a Financial Gym client, is an important exercise for anyone who wants to get serious about their financial health. Your net worth (assets minus liabilities) is the place to start.
Your net worth is a snapshot of your financial health but does not define your self-worth. Your finances are just a tool to help you meet your goals. It’s important to approach this process with no judgment.
When calculating your net worth, make sure you consider all of your accounts. In addition to the balances, you’ll also want to check on interest rates for your accounts.
What to Keep Track of Regularly
Assets: Checking, savings, investment, and retirement accounts. Make sure you know where all of your accounts are. For example, if you’ve switched employers, you may have a 401k you haven’t been tracking.
Liabilities: Credit cards, personal loans, car loans, student loans, medical debt, and tax debt. When assessing your liabilities, check interest rates and minimum payments.
Student loans: Are your loans federal or private? For federal student loans, there are always changes, and it’s important to stay informed and up to date on what is required for your loans.
Income: Understand your income flow. Are your paychecks consistent and predictable? Do they vary with the hours you work? Are you self-employed with irregular income? When you understand your income, it’s easier to create a plan.
Budgeting and Planning for Goals
Organize your expenses into fixed and variable categories. Fixed expenses like rent, utilities, and internet bills are recurring or predictable. Variable expenses, like groceries or retail, aren’t always consistent.
Tracking your spending helps you understand where you’ve spent money. With that understanding, you can create an accurate and sustainable budget.
To start your budget, subtract both fixed and variable expenses from your current income. You’ll be able to see if there is enough for other goals or if adjustments need to be made.
Part of your budget should include savings goals. A great goal is 10-20% of your income. If you can’t save that much, that’s okay, start by saving any amount. Saving is like building a muscle, start small and increase the amount as you can.
You do not have to go through this process alone! If figuring out your net worth and creating a budget feels stressful, work with a Trainer at The Financial Gym. They can help you through the process and provide powerful accountability throughout your journey.
If you want to work with a Certified Financial Trainer to help navigate your finances, schedule a free warm-up call today! If you have any ideas or questions for the show, send an email to trainerpodcast@fingyms.com.
Resources
Meet The Trainer
Tina Hang, Certified Financial Trainer
Sam Cash, Certified Financial Trainer