Keeping Your Personal Financial Affairs in Order

Apr 2017


It’s hard to believe that the first quarter of 2017 has come and gone. By now you most likely have forgotten about what your 2017 New Year’s Resolutions were. However, one thing that many of us say at the beginning of a New Year is that we are going to do a better job of keeping our personal financial affairs in order. Even though you may have forgotten about that resolution and have done very little to do a better job with your finances, it’s not too late. The end of a quarter gives us a good opportunity to try to do a better job with our finances. The reason for this is that typically, at the end of the quarter, you are going to receive a statement from your investments including your 401K . Not everyone receives monthly statements, but just about everyone receives quarterly statements.

As I’ve stated for years I believe there are two documents you need to prepare that will help you keep your financial affairs in order. These documents are a family balance sheet and a cash flow statement. Both of these are easy to prepare and you can do it on your own.

A family balance sheet is important because it’s a picture of where you are financially. It’s hard to get to where you want to go financially unless you know where’re you’re starting from. That is exactly what a personal family balance sheet does. A personal family balance sheet is nothing more than a listing of your assets and liabilities. Since you’re going to receive, over the next week or so, your quarterly investment statements including from your 401(k) Plan, this is a great time to do that family balance sheet. Remember, in doing a family balance sheet it’s easy to look at the value of your stocks, bonds and mutual funds because you are going to get statements for those. What is more difficult are assets you don’t receive statements for, such as your home and any collectibles you have. Remember, in valuing those items it’s not what you think they’re worth; rather, it’s what you can sell them for. If you have a collection of old baseball cards and you paid $10,000 for them, that does not mean they’re worth $10,000 today. The reason you’re doing a personal family balance sheet is to know where you stand and therefore, you have to be honest with yourself.

The other side of the balance sheet is your liabilities. It is always important that you stay up to date with your outstanding debts, including the current interest rate that you are paying.

The beauty of a personal family balance sheet is that it allows you to know where you are financially and you can use it as a tool in the future to see if you’re making progress financially.

The other document that you should prepare is a cash flow statement. You should look at what money has come in over the last three months and where it has gone. I always believe one of the keys to good financial planning is to know what it costs you to live a month. I believe this number is essential in any sort of retirement planning. Not only to determine if you can afford to retire, but also if you’re in retirement to make sure that you’re not overspending and that you can afford to stay retired.

Whether you made a New Year’s Resolution to get your financial house in order or not is immaterial. What is material is that this is a great time of year to spend time with your finances and by spending a little time now it will definitely help well into the future.

Good luck!

Rick is a fee-only financial advisor. His website is If you would like Rick to respond to your questions, please email him at