I talk quite a bit about “getting more involved in finances,” but what does that mean exactly? How do we get a good picture of our “flocks?” Are we all supposed to become financial experts? That sounds pretty impossible for those of us who aren’t naturally inclined money managers.
But we can probably learn something from those who are naturally inclined, who prepare financial summaries for a living. And maybe if we reduce personal finances into some manageable concepts, we can break those down further into bite-sized portions that people like me can deal with. Over at the SBA and SEC websites, I found all kinds of information about notes receivable and accrued expenses. But there are four elements that probably apply to most households. They are, in layman’s terms:
1. What you own
2. What you owe
3. What comes in
4. What goes out
My thinking is that, if we have a good understanding of these four things, we’ll know pretty well the state of our flocks. In this post I’ll talk about the first two—what you own and what you owe—and I’ll talk about the other two next week.
What You Own (Assets)—These are anything of value that you have. Examples include:
What You Owe (Liabilities)—The SBA site calls these, “obligations to creditors,” and examples would be:
Car, student, and other loans
Federal and state taxes
OK, I know I said that breaking down finances would make them easier to manage, but I feel overwhelmed after typing that. 🙂 To make matters worse (or better, depending on your situation), here is another accounting term: “net worth.” That is what’s left after you sell all your assets and pay all your debts. But as always, Jesus gives us the right perspective on it all:
~~Then He said to them, “Beware, and be on your guard against every form of greed; for not even when one has an abundance does his life consist of his possessions.” (Luke 12:15) ~~
So if we know that our true value is not based on our net worth, what does it matter? Why bother learning these (possibly painful) facts and figures, especially if your husband is already handling them just fine?
Well, as I talked about during the 5-5-5 Series, it might help a relationship (I said might) if both the husband and wife understand their financial situation. It may help the finances, as well. Either way, each one of us is responsible for the stewardship of what God has given us. So, as agonizing as it may be, it’s a worthwhile endeavor. I do know that it’s not easy. As I’ve said before, I don’t particularly enjoy talking or thinking about money. And even though I have a good handle on our bills and expenses, only recently did I myself write down everything on the list above. For you, the first step could be getting an index card and writing “Own” on one side and “Owe” on the other, then putting it away for a while. You might look up your home value online. Or order your credit report. You could download one of the worksheets below, and then, little by little, add the information as you learn it.