How to Assess Your Current Financial Situation

Assessing your current financial situation is the first step toward gaining control over your money. Start by listing all sources of income, including salary, side gigs, and passive income. Next, calculate your monthly expenses—fixed (rent, utilities) and variable (groceries, entertainment). Track your spending for a full month to identify patterns or problem areas. Then, list all your assets (savings, investments, property) and liabilities (debts, loans, credit card balances) to determine your net worth. Review your credit report and score to understand your borrowing power and potential financial risks. Evaluate your savings, including emergency funds and retirement accounts, to see if they align with your short- and long-term goals. This comprehensive snapshot will highlight areas for improvement and help you create a realistic budget or financial plan. Regularly reassessing your finances keeps you informed and in control, enabling smarter decisions and better financial stability over time.