“Shoot close up for impact” (SCUFI) is a great technique for taking pictures. One I will always remember because I have seen the benefits. I learned this technique and others from a great instructor, Greg Johnson (The Tornado Hunter), in a two-day photography workshop. The application and impact of this strategy are shown throughout this writing!
We often say, “A picture is worth a thousand words”. Guess what? This also applies to our financial circumstances. One snapshot speaks volumes about our present situation; and when we apply the “rinse and repeat” process every year, we can measure our progress…all because we use the following special technique. Really!
The creation of the Balance Sheet, also referred to as a Net Worth Statement or Statement of Financial Position, lists all the assets (everything we own) and liabilities (everything we owe) at a specific time in a calendar year. This special approach enables us to calculate our net worth, the difference between our assets and liabilities.
|CIFP The Canadian Institution of Financial Planning|
We are having this conversation now because a new year is rapidly approaching. Scheduling an appointment with ourselves to do this on the same date every year develops into a new worthwhile habit. This financial snapshot provides insightful information and comes in handy...
- When we are applying for a loan including a mortgage,
- When we are planning our retirement,
- When we are developing our estate plan or writing our will,
- When we are estimating our tax liability upon death,
- When we are determining our life and property insurance needs,
- When we are creating our wealth investment plan,
- Or if we are resolving a divorce settlement.
The initial commitment may be time-consuming but the effort will be valuable. Once our first Net Worth Statement is created, only minor tweaks in following years will be required to keep the statement updated and current.
The wheels of our progress will be clearly visible with each passing year and with the creation of a new balance sheet. If we’re in a downward spiral and our net worth has decreased (rather than increased), then we know we are headed in the wrong direction and need to apply the brakes on “something”.
You are invited to take a picture. Collect your financial information; list your assets and liabilities on a balance sheet; and then determine your net worth. One client, who did this exercise, was astonished with the results. He felt stressed by the impact of his newly-acquired car because he understood the impact of his newly-acquired car loan on paper. He was dragged down with debt; and he could see clearly what changes he needed to implement. A financial picture is worth a thousand words. Here’s your opportunity to shoot close up for impact and see the results for yourself.