Know Your Net Worth and Cash Flow

Write down your monthly cash flow number. You'll want to refer back to it when setting goals for the upcoming year.

Chart Your Progress

If you use a program like Quicken to track your finances, you can easily chart your net worth and see the progress you're making. There are also online calculators that you can use. Here is link to a net worth calculator.

It's a smart idea to set a regular interval for calculating your net worth and evaluating your progress -- I recommend doing it at least once a year or, better yet, quarterly. And, you can also use Quicken to track your cash flow; that is, your income and expenses.

If you prefer pen and paper to pushing pixels, fill out a loan application. Not because you really want to apply for a loan, but because a standard loan application is all about assessing these two fundamental components of your financial health: your net worth and your cash flow.

Actually, a loan application shows a variation on cash flow that focuses on your income and your housing-related expenses. Here's a link to a standard loan application form that you can print out and complete.

Remember, you can't know where you're going financially before you know where you are today. So take a snapshot of your net worth and your monthly cash flow. It will put you in position and give you the information you need to set financial goals for 2008.

Cha-ching! That's all for now, courtesy of Money Girl, your guide to a richer life.

As always, everyone's situation is different, so be sure to consult a tax or financial advisor before making important financial decisions. This podcast is for educational purposes only and is not intended to be a substitute for seeking personalized, professional advice.