What is a Financial Snapshot?

Today’s Guest Post is by my favorite incognito blogger going by the alias “J. Money” at Budgets are Sexy. Be sure to download his Budget template to get started.

“Financial Snapshots” are all the new rage!

Haha….okay, so I kinda made that up. But if this were true I guarantee our economy wouldn’t be in this mess to begin with! If you don’t know where your money’s coming and going, then I’m sorry to say you’re in a sad state of affairs.

But guess what – you can change that right RIGHT NOW. Yup, it doesn’t matter if you’re 13, 36, or 50. The second you start tracking this stuff your life gets a lot more stress-free, and not just financially :) So what, exactly, is this “Financial Snapshot”? Well, according to the Dictionary of J. it’s the following:

Financial Snapshot [fi-nan-shuhl snap-shot] noun: A place that lists all of your debt, all of your savings, your net worth, and most importantly your budget – all in one spot!

In fact, I’ve even got my own financial snapshot! Recently updated and everything. And you’re more than welcome to download & tweak whatever you want – I created a blank template for anyone to use :) I prefer using Excel and Google Docs for accessibility, but ANYTHING will work as long as it gets you to stay on top of it. A lot of people like using software like Quicken or online sites like Mint or Yodlee, but even an old fashioned pencil and paper would work (remember those?). Once you get going, you really only need to visit it a couple times a month, that’s it!

Now, for the sake of keeping this short and not completely boring you to death, I’ve jotted down just a few easy steps to get you started. You might even have half of this stuff saved already! But whether you continue reading or not, just remember the main point here – To have a clear understanding of your financial situation. That’s it! Once you’ve gotten a firm grasp on that, it’s all downhill baby :) Okay, so let’s get started:

1. Get Your Mind Right. Let’s face it, if you’re not in the mood to talk finance and get budgety, it’s just not gonna happen. We’re all human, and if we don’t wanna do something we usually don’t do it. Unfortunately organizing your finances is usually one of them. But if you set aside little bits of time, and update it all when the mood is right, you’ll find it goes much much smoother.

2. Start With The Easy & Quick Stuff. If you take a look at the snapshot, you’ll see there’s room for all sorts of numbers to fill out (don’t worry, once you do it the first time it gets MUCH quicker). The easiest to start with in my opinion is your credit card balances and income. You can easily get this by logging into all of your accounts and copying & pasting these numbers over.

3. Tackle Your “Net Worth”. Your net worth is basically all of your assets minus all of your liabilities. So things like savings, 401(k)s, Roth IRA’s, stocks, bonds, they all get recorded in the assets department. Then we got things like credit card debt, loans, etc that all go under the liability section. Gather it all up and record the info. in the right spots to find out your net worth’s number! And remember, there are no right or wrong answers here – just the facts. The more you’re honest with yourself and the more you stick with it, the better you’re gonna feel. Plus, it’ll make future decisions that much easier to handle now that you have an aerial view of your financial situation!

4. Create a Simple Budget! (my favorite part) The template’s already there, all you have to do is fill in the categories and the amounts you’re trying to allot for them. HAH! that’s “all”, right? Nah, it’s not too bad :) But if you’ve never done it before, you’re gonna have to do a little legwork first before you can come up with some good numbers.

First, go back a month or two & track where all your money went. Look at your checking accounts, savings accounts, credit cards, all of it. Add them all up per category (mortgage, cable, food, etc), then divide by the number of months you’ve tracked to give you a proper estimate of how much you’re spending per category each month. Now, plop these #’s into your spreadsheet and voila – you’ve got your first budget! I always advise keeping the #’s in tact for the first month (or pay period, or whatever length you want to budget for) so that you can get used to balancing it okay. Once you’re used to it, challenge yourself and start chopping away at the numbers! You’ll be amazed what you can accomplish once you have a game plan in action.

So that’s it my friends – the “Financial Snapshot” as your boy J. Money sees it. With everything in life, it’ll take some nourishing and revising to get a good formula going. But if you stay on top of it and keep your head up, you’ll have no else where to go than up! Ya just gotta start baby…Now, if you’ll excuse me, I have to start stealing some of these coupons around here and start saving some money ;)

J. Money writes for Budgets are Sexy – A laid back finance blog of a guy just trying to spice things up a bit. He also finds budgets….well…sexy! If you like what you see, hook yourself up with his RSS feed.