Not everyone enjoys managing their money or spending the time to know the complete ins and outs of their own finances. Some people try unsuccessfully; some just don’t have the time. Whether you’re a financial geek like me or just trying to stay in-tune with your finances, there are five basic personal financial statistics you should know.
If you aren’t aware of these five figures, making progress toward your goals will seem much harder. In this case, ignorance is the opposite of bliss.
1. Gross Income and Net Income
Your gross income is your salary before subtracting taxes, insurance, investments or any other expenses. It’s your base salary/hourly wage. Net income is what you take home from your paychecks. It’s the actual amount you live on and use for your household and living expenses.
2. Essential Expenses
General expenses include both essential purchases and excessive spending. By subtracting out the essential and non-essential expenses you can see what you’re really spending your money on. In the event of a job loss or other life tragedy, you want to be prepared to live on bare bones. If you lump these figures together, you won’t know how little you can truly live on in case of an emergency.
3. Debt Balances
You don’t need to keep up with your balances every day, but you should do a quick monthly checkup. You want to make sure your payments are being posted properly and that you aren’t being charged excessive fees. Plus, seeing the balances go down every month is very encouraging and will help you stay motivated to pay off those debts.
The value of your, home(s), vehicle(s), property and any other items of value are considered assets. Any cash in the bank, investments, and other financial accounts are assets too. In the event that everything needs to be liquidated, you’ll need to know the value of your assets.
5. Net Worth
Net worth is commonly overlooked but is one of the most important things to know. Your net worth tells you, really, how much “you’re” worth. Net worth is your assets (the things you own) minus your debts (the things you owe). If you have more debts than assets, your net worth will be negative. If you own more property than debts, your net income will be positive – what everyone strives for.
The Bottom Line
Knowing these statistics will help you know where you are, so you can better figure out where you’re headed. While a consistent budget will keep you on track all year long, updating your finances monthly or quarterly will still give you financial piece of mind. You don’t need to be an expert of do everything perfectly, just familiarize yourself with these basic figures and you’ll be in good shape for 2012.
Do you know these statistics as they apply to your finances? What other figures do you think are essential? Let us know in our comments section below.
Carrie Smith is a PerkStreet Customer Columnist who has worked as a freelance Certified Bookkeeper for nine years and as a Tax Specialist for four. She specializes in small business and oil and gas accounting. She has written several finance and accounting articles at Hubpages.com, and also writes regularly on her own blog CarefulCents. Follow her on Twitter @applecsmith.