Step 1: How Much Money Has Come Into Your Life and
What Do You Have to Show For it?
This step is about taking a clear, honest look at your current financial situation and how you got there.
This is an important step in orienting yourself toward positive change. In these activities you’ll review your earning history and get an idea of how much money has come into your life. Then you’ll then take a look at how you’ve managed it, reviewing what you own and what you owe (assets and liabilities) in order to get an accurate picture of your finances today. Getting clear with the past prepares you to come into the present in the Steps to follow.
In Step 1 you will create two tools for your journey to “enough.”
o Your Lifetime Income Estimate
o Your Personal Balance Sheet
Part A. Your Lifetime Income Estimate
How much money have you earned in your lifetime? How much money other than earnings has come into your life?
Why explore your earnings history?
- This process is empowering; it will remind you that you can bring money into your life.
- It (in conjunction with your Personal Balance Sheet in Part B) will help you realize just how you’ve stewarded that money.
- If you have made very little money over the years, it will help you recognize how resourceful you’ve been in living on less.
► Calculate your “Lifetime Income”
“Lifetime Income” – Sample Worksheet
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Lifetime Earnings
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Financial Sources:
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Amount
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Taxed income (SSA report)
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Untaxed jobs
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Selling stuff (cars, CDs)
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Allowance /”spending money”
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Gifts
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Interest on savings
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Total Lifetime Earnings à
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$________
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Part B. Personal Balance Sheet
To create a new map to your future you need a starting point – an awareness of where you are, financially, right now. Your Personal Balance Sheet will serve as the “You Are Here” spot, as you chart a course into the future.
A balance sheet compares what you owe with what you own to come up with a figure called “net worth” – a number representing your current financial situation. Studying the "balance" of assets and liabilities is a fundamental business practice. Treating yourself as a business will help you get an accurate, objective view of your current financial situation.
A Personal Balance Sheet is a snapshot of a moment in time; it is based on things that change regularly, like bank account and loan balances. To create a balance sheet, add up all your assets on the left side of a page, add all your liabilities on the right side, and then subtract your liabilities from your assets. This is your net worth - what you have left to show for your lifetime income.
► Calculate your Personal Net Worth
Sample Personal Balance Sheet of Assets and Liabilities
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OWN
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OWE
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Liquid Assets
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(+) Cash Value
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Liabilities
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(-) Cash Value
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Cash on hand
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Car loan
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Bank Accounts
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School loans
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Investments
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Mortgage
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Credit Cards
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Hard Assets
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Personal Loan
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House
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Vehicles
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Personal items
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Total Own
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$_________
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Total Owe
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$_________
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Personal Financial Net Worth
Assets – Liabilities = $_______
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Step 1 -- FAQ
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