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Step 1
Net Worth
Net Worth is a measure of your wealth and is the total value of everything you own [Assets] minus the total value of debts you owe [Liabilities].
To become WEALTHY, you must OWN ASSETS and REDUCE LIABILITIES.
How to use the solowealth Net Worth calculator:
- Enter CURRENT values. When adding multiple entries into the calculator for each category, separate each entry with "+" and use the "TAB key" or move on to another category to view the total. The calculator will automatically calculate your Net Worth as you fill in the values.
- Any section that doesn't apply to you, leave the space blank.
- Complete and review your Net Worth statement ANNUALLY and aim to increase your Net Worth every year.
- Save a copy to compare to previous Net Worth statements. Although the values will change throughout the year, all you're trying to do is get an idea of your financial situation today and how it will compare to future years.
- No personal data or login is required.
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Step 2
Financial goal
You need a financial goal to determine how much to save. Don't wait for a 'jackpot day' to begin saving & investing. Even small amounts, invested consistently over enough time, will have a great impact with the power of compound growth of your investments.
How to use the solowealth Financial Goal Calculator:
- INITIAL BALANCE: To start, first enter the amount you have currently saved. Don't worry if it's $0, you have to start somewhere.
- FINANCIAL GOAL: Next, enter the amount you're hoping to save.
- ANNUAL INVESTMENT RATE: Enter the percent rate of return you expect to earn on your investments [just the number, no need to enter "%"]. This rate plays an important role to reach your financial goal. It's tough to predict this rate but advisors will typically use 6% as a reference.
- YEARS AVAILABLE TO SAVE: Enter the number of years you're giving yourself to reach your financial goal. It can be a 1-year goal, 5-years goal, 10-years goal or more.
- Play around with the numbers to see what impact each of those varaibles [Initial Balance, Annual Investment Rate, Years Available to Save] will have on your Financial Goal.
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Step 3
Cash Flow
Use the solowealth Cash Flow calculator to track your monthly expenses. You must have an idea of what your monthly expenses are every month.
How to use the solowealth Cash Flow calculator:
- Review ALL of your expense transactions for the previous month by viewing your Checking Account statement, Credit Card statement or any other statement of expenses.
- Any section that doesn't apply to you, leave the space blank.
- Enter each expense in the appropriate category. Create you own category if needed using "ADD EXPENSE."
- View your Results. Print/Save a copy for each month.
- Save and invest any amount left over for the month. If you have nothing left over, review any expenses (financial waste) that you can either trim or eliminate.
- When adding multiple entries into the calculator for each category, separate each entry with "+" and use the "TAB key" to view the total. The calculator will automatically calculate your Cash Flow as you plug in the values.
- For the category: "(MINUS) TAXES & WITHHOLDINGS / DEDUCTIONS," just enter the value and the calculator will automatically subtract it from your income. No need to enter "minus (-)"
Solowealth Tips:
- SAVE at least 5% of your after-tax income in a Savings Account as an EMERGENCY FUND.
- INVEST at least 15% of your after-tax income in an Investment Account for your FUTURE FINANCIAL FREEDOM.
- Live off the remaining 80% of your after-tax income. That's why it's important to calculate your monthly Cash Flow before you make a big purchase such as a home or vehicle, to ensure your expenses fall within the 80% range.
- Never touch your emergency fund unless there's a disruption to your employment status. Vacations and shopping DO NOT qualify as emergencies.
