The Simple Rupee:Gathering Data

In this article,I will discuss one of the most important steps in Financial Planning:
Gathering Data.What this means is that you need to know what is coming in and what is going out.One of the best tools to record this is a Balance Sheet.This is a list of everything you own (your ASSETS) and everything you owe (your LIABILITIES).This is like a snapshot of your financial picture.This changes in every moment of time.Moreover,it can also help in giving you an idea of where you stand and where you will be in the near or distant future.Your Balance Sheet gives you your NET WORTH (Assets-Liabilities).This can either be a positive or a negative figure.Of course,everyone would love to have the former!An example of what can be listed in Assets :
1.All the cash you have right now.
2. All the money in your Savings Accounts.
3. The cash value of your life insurance policies.
INVESTED ASSETS.For eg.
1.Stocks and Mutual Funds.
2.GOI Bonds.
3. Pension Funds.
Other assets like.1.Your home2.Property3.Vehicles4.Personal property5.Antiques,paintings,works of art.
LIABILITIES may include:
1.Loans of all kinds
2.Credit card debts
This is by no means an exhaustive list of assets and liabilities.I have given examples of what you will commonly find in a balance sheet.Once you list out your assets and liabilities in a balance sheet in two columns,it becomes easier to assess your Net Worth.In my next article,I will try and explain how useful a Balance Sheet can be as a tool in your Financial Planning.