The It All Starts with Your Goals Effect

Mapping your own road map is easier than finding Luke Skywalker.

I can relate to the comparison between goal-setting and following a road map. Although, I will admit, I don't always do it myself. I do know the quickest way to reach your destination is to plan a detailed road map to get there. And once you're on the way, continue to check your progress to make sure you stay on course.

Financial planning can be just like toy collecting. You need to set your goals, chart a course of action for reaching them, check your progress periodically, and make adjustments when necessary.

But before you can get there, you need to figure out how to get where you're going, you need to know where you are today! You can do that by figuring out your net worth: the amount of money you'd have if you sold everything you own and paid off all your debts today. If you check your net worth regularly -- say every year or so -- you'll know if you are making progress on your financial journey.

Net Worth: Your Starting Point

A Net worth statement is a tool that you can use to determine whether you're putting money away in investments that you can draw in the future. Figuring out your net worth may take a little time, but it's an exercise worth doing at least once a year. Why? Because the process of figuring out your net worth helps you answer these important questions:

• Are you spending money faster than you're earning?
• Is your debt under control--or are your debts growing faster than your investments?
• Have you set aside enough cash to get you through a financial emergency? Or would you have to sell something just to get by?
• Is your emergency fund large enough?
• How much are your investments earning? Is your net worth increasing?

By reviewing your net worth each year, you'll be able to spot your own financial trends. For example, you want your assets to increase faster than your liabilities. If they're not, you need to understand why.

3 Easy Step to Determine Your Net Worth

1. Write down the current value of everything you own (your assets)

• Investments such as your bank account
• The fair market value of your home, other real estate you own, art, toy collection and other collectibles. and your car.
• the cash value of life insurance policies.

     2. Now right down everything you owe (your debts and liabilities):

• credit card debt;
• mortgage, car, student, or personal loans;
• property or income taxes.

     3. Subtract your total liabilities from your total assets. What's left is your net worth. (if you owe more than you own, this amount can be less than $0.)

If your net worth is negative, you are most likely in debt and don't have any kind of savings. Are you choosing your wants, such as new toys, or are your needs being met first?

About the author: John Sholtz is an avid toy collector and the interim editor of the Batcave Toy Room due to the abrupt death of Bruce Wayne. Learn more about him here and connect with him on Twitter at, Facebook, Google+ and LinkedIn.