Hi, I’m JJ Childers here with another segment of the Monday Morning Mentor. This week we continue our focus on the process of setting up a financial plan with the third of our five essential areas. That third part is to come up with a breakdown of your current resources. By “resources,” I am referring to your sources of income and the assets that you have that can generate income.
Over the past two areas, we set a financial goal and determined our current situation. This gave us a gauge of where we sit currently in relation to that goal. Continuing with last week’s illustration, the goal is $1 million and we currently have a net worth of $150,000, leaving us in need of $850,000 more in order to get there. We now need to figure out our plan for how to create that $850,000. Breaking down our current resources is the first step in doing that.
To determine how we’re going to create that $850,000, we need to see how our current situation can help us. Let’s say that you currently make $80,000 per year. On top of that, you’ve got savings, investment, and retirement accounts totaling $75,000 and another $75,000 in the equity in your home. You know better than I do how that $150,000 net worth came into being and how long it took to build it. This will give you an idea of how long it might take to build it up further.
Understand, the information in this step of the process is not going to give you everything that you need to put your plan into action, it’s simply one of the pieces to the overall puzzle. As with any puzzle, if you don’t have all of the pieces, it certainly won’t come together. If you haven’t take the time to locate this piece, do what it takes to find it so that you can continue on with your plan.
