Learning how to budget, save and control your assets allows you to live comfortably within your means while being prepared for emergencies. While you may enjoy spending money and accumulating goods when you’re young, you’ll be much better off at retirement by starting early to learn about financial planning and the benefits it brings. Controlling your assets is a vital component of building wealth.
The first step in controlling your property and money is to take an inventory of what you currently have. Assets are the sum total of everything you own. Your liabilities are debts you owe. To reach your total net worth, subtract your liabilities from your assets.
You can’t control what you don’t know. Before you create a budget, spend a couple of months tracking your spending. Write down everything, including bills you paid, food, entertainment and transportation costs. From your lists, you then have a better idea of where you can cut back and what steps you need to take to better control your spending and increase your assets.
Create a Budget
Just like running a business, maintaining a household requires you to adhere to a budget in which you bring in more than you spend to increase profits. Careful record-keeping and sticking to your asset-building plan provide means to reach your personal financial profit-making goals.
Pay Down Debts
Interest on debt cuts into your assets and reduces your ability to increase your wealth. Pay those debts that carry the highest interest first and pay more than the minimum payment on your remaining debts to bring down the principal balances. Borrow money only when the assets you buy will increase in value, such as property or a house.
You’ll remain in control of your assets easier if you set reasonable goals and stick to your savings plan. Stay the course with a savings plan to pay yourself first through measures such as direct deposit or automatic withdrawals taken from your checking account to go into a money market account. One of the best ways to save is to take advantage of employer-matched 401(k) plans because the employer matching amount is free money and your portion is deducted from your paycheck before taxes.
Reevaluate Your Plans
After setting up your financial plan and taking control of your assets, you need to periodically review your assets to make sure you’re staying the course and continuing to maintain that control, according to the Certified Financial Standards Board of Standards. Situations change and your assets may be affected by events such as divorce, unemployment, receiving an inheritance or having children.
Linda Ray is an award-winning journalist with more than 20 years reporting experience. She's covered business for newspapers and magazines, including the "Greenville News," "Success Magazine" and "American City Business Journals." Ray holds a journalism degree and teaches writing, career development and an FDIC course called "Money Smart."