Creating your own personal wealth, from whatever means of income you enjoy, requires knowing where you’re going, and accounting for your own personal finances. It is essential to know what you are worth – your assets and liabilities – and Owner’s Equity – before you can start to develop a good
financial plan to create wealth.

In the world of accounting Assets = Liabilities + Owner’s Equity so this is what we have to establish now.

Firstly you have to work out what your assets and liabilities are, then you can calculate your Owner’s Equity. When you know what you are worth, developing a financial plan to reduce your debt and achieve your financial goals is the frst
step to personal wealth.

Step 1. Calculate the amount of your outstanding liabilities (or money you owe). This means you write down in a list exactly how much you owe right now on
your mortgage, credit cards, and any other bills or loans.

Step 2. Now make a list of all your assets (dollar value you would get for these if they were sold). For example your cars, home and cash you have in the bank – list all your major assets.

Using the Assets = Liabilities + Owner’s Equity equation we gave you before, calculate what you are worth. Most financial or credit advisers agree you need to allocate money every month into responsible saving, investing and paying down your debts as crucial part of your financial success. It’s not enough to just put money in the bank when you are also carrying a credit card balance because you are losing the benefits of any interest earned on your savings.

To increase your Owner’s Equity you must pay down your liabilities and avoid borrowing more money to buy more assets. It’s dificult sometimes to stick to this plan when there’s advertising in your face all the time to buy this, buy that and buy it NOW! – the “must have everything now” attitude. But you must stay with your financial plan if you want success and personal wealth.

Here is an example of a good financial plan (but this is by no means th only one):

1. The money you are currently investing or putting into your savings account every month, divide the total of it by 3, then -

2. Pay off one third of this money every month to your outstanding debts.

3. Pay one third of this money and deposit it in your savings account at your bank. This will accumulate into a pool of money for your monthly needs. Over time you can use it to finance your family’s future needs or apply it to the goals of your financial plan.

4. Pay the final one third of this money to buy 1-5 year Certificates of Deposit, but save up until you can buy CD’s of $1000.00 every time you invest. Do this buying at one CD every three months to six months, but ensure you keep enough cash in your checking and passbook savings for any emergency.

The biggest barrier to financial success is large credit card debt and not paying it off as quickly as possible. By following these tips you will pay off your liabilities in an appropriate manner. By investing in 1-5 year CDs you’re earning interest and compounding your money by purchasing more CDs at definite intervals. Compounding is very powerful.

It is also suggested when you’ve enough money saved up in your normal savings account, you begin to speed up your mortgage payments every month. Most mortgage lenders allow extra payments per month but check this out with your lender before you increase your payments. If they do, start paying extra every month and you will build equity in your home faster, save on interest charges and complete the mortgage much sooner.

This financial plan is only one of several, but these principles are basic and necessary to reduce your debt faster and build wealth for you and your family quickly. It will also help you acquire spending, saving and investing habits that are conducive to your personal wealth creation.

If you find yourself dealing with financial stress, it can be an exceptionally difficult time. However, you mustn’t let this stress take over your life. If the bills are piling up, there are steps you can take to reduce your stress and your debts. The most important thing to keep in mind when you’re faced with financial troubles is to make a plan and stick to it. If you need help with this plan, it would be in your best interest to seek out a financial planner.

Here are a few tips that can help you on your way to beating financial stress:

• Don’t spend money to relieve your financial stress. It’s often tempting to reduce stress by going out for meals, entertainment, and other activities. This is clearly counterproductive. Instead, use some free stress relievers such as a warm bath, a good book, or a social event with friends at home.
• Accept your situation. Being unwilling to accept that you’re dealing with a hard situation can increase your financial stress. In many financial scenarios, you’re unable to control the situation. However, once you surrender control and accept it, you’ll feel better knowing that you can only do what you can to improve your financial outlook. It may take time, and that’s okay!
• Don’t be risky. If you have investments that may be on the risky side, it may be time to switch them to more of a sure bet. This security alone may ease your financial stress.
• Discuss your problems with family. If you have a spouse, make sure you keep the lines of communication open. Many marriages suffer during times of financial stress, but with honest communication and careful planning, you can keep your marriage and family happy.
• Stay Organized. Make lists and keep a calendar. It’s important to schedule time for relaxation, too. You’ll need some time where you can enjoy yourself without worrying about anything – especially your financial stress troubles.

Have a Plan Simply having a plan to improve your financial problems can reduce your financial stress level. Plans and goals will help you keep things in perspective and show you that you’re making progress towards a better life. You don’t need to do this alone. There are many professionals available to help you create a successful financial plan, even in your current situation.

Here are some items you may want to review before forming your plan:

• If you find that you’re spending more than you’re making, find ways to cut expenses.
• See if you can pick up a part-time job or implement other ways to add to your income.
• Look into refinancing options for your current loans.
• Start using your debit card instead of a credit card.

Maintaining Your Health

People often forget how important it is to maintain your health. When your body is dealing with this kind of financial stress, it can take a toll if you don’t take steps to relieve it.

Next time you feel exceptionally stressed out, become aware of the state of your body. You’ll likely notice that all of your muscles are tense. Take a few moments to relax your muscles and take a few deep breaths.

While you may not have control of your financial situation, you do have control over how you feel about it. Focus on taking action to do what you can to improve your financial stress and know that better days are ahead.

Act Now!