Step 2: Put Together Your "Ow-Ow" Statement
Your Initial Financial Plan:
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Print Out The Eight Step Checklist to Keep Track of Your Progress
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Step 1: Calculate Your Financial APGAR Score
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Step 2: Put Together Your "Ow-Ow" (Net Worth) Statement
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Step 3: Prepare Your Monthly Cash Flow Budget
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Step 4: Set Your Savings and Debt Reduction Goals
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Step 5: Project If You're Saving Enough for Retirement
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Step 6: Work Through a Tax Projection (to Avoid Any Surprises Next April 15th)
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Step 7: Review Your Life and Disability Insurance Needs
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Step 8: Have an Attorney Draft Certain Essential Documents
Have You Read...
The Millionaire Next Door
Find out the habits of America's wealthy.
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Many of you are probably already familiar with this basic principal of accounting:
Assets minus Liabilities equals Net Worth
When preparing your initial financial plan, one of the first steps is to calculate your net worth. To do so, you'll need to work through an "Ow-Ow" statement.
What the heck's an "Ow-Ow" Statement? An "Ow-Ow" statement is nothing more than a snapshot of what you OWN and what you OWE on a given day. On the "Ow-Ow" Statement, all you need to do is list all of your assets and all of your liabilities at their fair market value as of a certain date. You then subtract your total liabilities from your total assets to determine your net worth.
When preparing your Ow-Ow statement, please keep in mind that:
Your assets might include:
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Checking and savings accounts
- Certificate of Deposits (CDs)
- Money Market Accounts
- U.S. Savings Bonds
- Mutual Funds
- Stocks, Bonds and Other Securities
- 401(k), 403(b), IRAs and
Other Retirement Accounts
- Your Principal Residence
- Other Real Estate Owned
- Time Shares, Boats and RVs
- Automobiles
- Closely Held Businesses
and Partnership Interests
- Cash Value in a Life
Insurance Policy
- Variable Annuities
Your liabilities might include:
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Credit Card Debts
- Student Loans
- Car Loans
- Mortgage(s) on Your
Principal Residence
- Other Mortgages
- Home Equity Loans
- Other Consumer Debt
- Margin Within an Investment Account
To help you prepare your "Ow-Ow" Statement, please view our completed example or print out our blank template. If you have Microsoft Excel, you can download the completed example and the blank template on networth.xls.
Time Saving Tip: The easiest time to gather information for your "Ow-Ow" Statement will be the month following the end of a calendar quarter, since most financial institutions send out statements to their customers as of the last day of each calendar quarter.
Have You Opened a Joint Checking Account Yet?
One decision you'll need to make right away is how to hold your money. You can either pool your money together in a joint account, keep your accounts completely separate, or use a combination of both methods. For most couples, pooling their money in one account seems to work best.
How About a Joint Credit Card?
Many newlyweds, to simplify their finances, open a joint credit card as well. Did you realize that there are a whole bunch of different credit card programs available? Luckily, the Internet has made it easy to compare different credit card opportunities that are available to you.