I have just re-watched the 100 second tip on “My personal balance sheet” (see video below). I was curious, and slightly nervous, to see what I am actually worth and whether I am ‘poor’ or ‘rich’. We tend to measure this by how much cash we have by mid-month, or how much debt we have on our credit cards. But in truth it’s about our big debts and our investments – that’s what really determines what we are worth financially, and whether we (my kids and I) are ‘poor’ or ‘rich’.
So following the guidance in the video, I listed all my assets (things I own): my house, my car and my shares; and then all my liabilities (my debts). Fortunately I only have a bond and a few thousand Rand in the credit card (which is a bit high thanks to replacing ALL my water pipes this month – that’s another story). And although I still owe just over one million on my house, I still come out with a positive net worth, as my assets are bigger than my liabilities – in the words of the JOL video, “things are looking pretty!”
Wow, what a relief that I’m doing OK when I look at the big question of ‘what am I worth’. Yes, on a monthly basis my money is always tight, but the big picture looks better. I am also going to use it as a reminder to continue to consciously manage my assets and liabilities to ensure I stay in this favourable position. My last column reflected on my new motto “never to go into debt over a simple want”, and this column also reminds me to keep that intention alive.
In my next column I am going to talk about Christmas and spending. If you’ve just celebrated Eid you’ll know all about spending a lot on celebrations; and with Christmas just five months away, now is the time to think about how we can manage the budget around that ‘festival of spending’!