Changes and Rearrangements

Last week, we looked at your balance sheet and found out exactly where you are financially.  Now it’s time to think about how you feel about your situation and what changes you might like to see in your net worth.


How comfortable (or not) do you feel about the amount of cash and money market savings that you have? How many months of expenses could you cover if something happened to your income? How safe do you feel with the amount of cash you have available?

If you have less than 6 months of expenses, you might want to consider creating a plan to bump that up. There is always something going on that gobbles up our excess cash – this time of year, it is graduation and end of school events. Then comes vacation time, and back to school and the holidays. Always something. Is there one thing that you could cut back on to squirrel away a bit extra each week to put toward savings? For example, if you usually get $60 in cash each week, could you just get $40 and move $20 to savings? That is a small thing but probably doable. The point is, nothing changes unless you have a firm action that you can change, in this case, the amount of your weekly ATM draw. What could you change to increase this area?

If you have well more than 6 months of expenses, perhaps you should consider converting that to an investment so that you have the potential for some investment growth. What is holding you back from putting some of your excess cash to work?  If having more available cash makes you feel better or if you feel that your income may be at risk, then holding on to cash makes sense. The point is to have a plan for how much you need and why.

As you look at the other assets on your balance sheet, the main question is how you feel about what you have. If you are heavy into illiquid investments, be sure that this is your intention and that you are comfortable with that situation. How about retirement accounts? Do you feel that you are on track?

Regardless of your answers, ask the questions and think about what changes you would like to see in the composition of your assets and the growth of your assets and make a plan to move in that direction.


Take a look at your short-term liabilities – credit cards mostly. How do those numbers make you feel? Are there balances there that you would like to be rid of? I don’t like having debt but when I get interest-free financing on things like furniture, appliances or car repairs, I take it. I make sure I pay it off well within the defined period but seeing that balance still makes me uneasy. How does seeing a debt number make you feel? Would you be willing to “rearrange” some of your monthly spending to pay more on the outstanding balance?

Do you know how much that debt is costing you annually? Take a look back at your statements and see the amount of interest that you are paying. Could you make a plan to get that debt paid off? Again, “a plan” means a specific action, (“I will not eat out on Friday nights anymore and instead put what I usually spend toward this debt”) that you can perform weekly or monthly. You have to change your behavior to make your balance sheet change.

What about long-term liabilities?  How does that make you feel? How important is it to you to be debt-free? It can become a reality if you make a plan for it to happen.

Net worth:

This is just the difference between assets and liabilities and indicates basically how much of a safety net you have created for yourself. The point of looking at this, and at the individual components that make it up, is to empower you to consider where you would like to be, what makes you comfortable, and take action to implement changes. By changing a few habits and making a few changes, you can make a change to increase your assets, reduce your liabilities, and increase net worth.

It is always within your control to move in the direction you want to go. Make a decision to create change and you will!