ReAnn Rothwell’s Money Saving Ideas, Tax & Organizing Tips

 A Net Worth and Cash Flow Statement help you assess your current situation.

TIAA-CREF.org has a very nice website with a free (gosh, I like that word) Net Worth and Cash Flow statement where you can  keep and update the results on your computer.  Your information and results will be saved as an Excel spreadsheet.

Per TIAA-CREF:

Net Worth Analysis

WHAT IT IS AND WHAT IT’S FOR:   

The Net Worth Analysis shows your financial condition as of a specific date to help you monitor your progress as you build your assets. 

The Net Worth Statement tells you what you’re worth financially. Use it to list all your assets and liabilities (your debts and expenses) and then subtract the sum of your liabilities from your total assets.

A low or negative net worth tells you that you’ll need to work on your Cash Flow statement to find ways of increasing your savings. The goal is to have a greater net worth each year.

What Your Net Worth Numbers Mean

Your resulting current net worth hopefully shows your assets exceeding your liabilities. If the gap is narrow or your liabilities exceed your assets, you’ll need to take steps to reduce your liabilities.

Here are some tips for improving your financial health:

• Own your home to get the advantage of tax-deductible interest; it’s also an asset with potential resale value.
• Limit or eliminate high-interest credit cards.
• Pay off high-interest credit cards and nondeductible loans — consider a home equity loan to consolidate all debts (the interest may be tax-deductible).
• Save part or all of your tax refund to accelerate your savings or to eliminate debt.
• Live within your means using regular income, not savings, for routine expenses.
• Put unexpected income immediately into savings

Cash Flow Analysis

WHAT IT IS AND WHAT IT’S FOR:   

 The Cash Flow Statement shows your income and expenses side by side on a monthly basis to help you find extra money for your goals. 

The Cash Flow Statement shows you exactly where your money goes each month and is your best tool for finding additional funds to save and invest. This statement is divided into two parts, one for sources of income and the other for monthly expenses.

 What Your Cash Flow Numbers Mean

When completed, your Cash Flow Statement lets you know where you stand: either you have money to save for your financial goals or you don’t.

If you’re in the red, review the Cash Flow Statement and carefully examine your discretionary expenses, noting those you can reduce or eliminate without hurting your “critical” budget. The goal is to modify your spending habits so you can free up extra savings. Maybe you can cut back on gifts and entertainment expenses, or consolidate all your credit card debts under one card that charges a lower interest rate.

Please note that TIAA-CREF’s Web Center offers a number of interactive planning tools that can expand on the work you do in the Organizer. Some of the tools are listed in the TIAA-CREF contact information at the end of the Organizer. Please also note that although the Organizer provides a good starting point for managing your money, it is not a complete financial plan.