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How to Understand your Current Financial Situation

Understanding your financial situation includes understanding your...

1.Spedning habits

Your personal finances relay heavily on how you spend your money. This is the largest contributing factor to a depleted bank account because your spending habits is directly linked to how much money is retained in your account.

Analyze how your spending habits are either helping your account or dramatically hurting your account.

If you have a habit of spending money before you make it, binge shopping after you get a paycheck, or just spending frivolously without a plan, then you have toxic spending habits that are hindering your financial success

2.Your current debt-to-income ratio

Knowing how much debt you have compared to how much you make will give you a sense of your net worth. Your total debt subtracted from your total income will tell you how much you're actually worth.

For example, if you make $50,000 annually, but you have $10,000 of outstanding debt, your net worth is then $40,000.

3.Your cash flow patterns

Your cashflow patterns include how often money is coming in and going out of your account. This can also include knowing how much your fixed expenses are every month. Your fixed expenses are a guaranteed outflow of cash each month and you can easily predict your future financial situation by knowing your fixed income and fixed expenses.

4.Your relationship with money

How you view and use money makes up your relationship with it. Your relationship with money partly comes from watching the people around you and how they act with their cash. You have to evaluate your influences and evaluate how you believe money affects your life.

Do you believe money can be a tool to help you advance in life, or do you believe that money is cursed and can only bring more problems?

I challenge you to get real with yourself and go through these 4 aspects of your situation so you can start on a fresh path toward the financial success you deserve.

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