Calculating Net Worth

Honestly, determining your financial status is a key step to financial life improvement.
Having your goals set and and all it planned is not enough. Having goals is a must, but in order to pursuit them, you need to clearly see your budget and then adjust your goals to them, to be more realistic, at least for the short term. So, in order to do that you must calculate your Net Worth, that's why you must follow these steps:

1. Write down your cash balance in the beginning of the year.
   
2. Add your expected income for the year. Check your most recent income tax return so you are sure to include all sources of income.
3. Subtract your estimated savings and investments
4. Subtract your annual expenses. Consult your checkbook to make sure you include all expenses. The amount remaining is your cash balance at the end of the year. If it is negative, you'll have to go back and see if you can eliminate some unnecessary expenses.
5. List all of your assets. These are the things you own, including your investments, home, life insurance, etc.
6. Subtract your liabilities; that is, everything you owe. Liabilities include your mortgage, charge account balances, loans, taxes, overdrafts, etc. The difference between your assets and liabilities is your net worth. If you calculate your net worth annually, you can monitor the growth in your personal wealth.
   

Having your net worth calculated helps you determine your current financial status, and coupled with financial goals helps determining the structure of your portfolio.

Planning your Personal Finance

Planning your financial life is of key importance, when it comes to personal finance and wealth.
A well prepared plan might have all kinds of elements, some of which are: checking and savings accounts, credit cards and consumer loans, investments in the stock market, retirement plans, social security benefits, insurance policies, and income tax management. However, in general there are 5 main points one has to consider:

1. Assessment: One's personal financial situation can be assessed by compiling simplified versions of financial balance sheets and income statements. A personal balance sheet lists the values of personal assets (e.g., car, house, clothes, stocks, bank account), along with personal liabilities (e.g., credit card debt, bank loan, mortgage). A personal income statement lists personal income and expenses.
2. Setting goals: Two examples are "retire at age 65 with a personal net worth of $200,000 American" and "buy a house in 3 years paying a monthly mortgage servicing cost that is no more than 25% of my gross income". It is not uncommon to have several goals, some short term and some long term. Setting financial goals helps direct financial planning.
3. Creating a plan: The financial plan details how to accomplish your goals. It could include, for example, reducing unnecessary expenses, increasing one's employment income, or investing in the stock market.
4. Execution: Execution of one's personal financial plan often requires discipline and perseverance. Many people obtain assistance from professionals such as accountants, financial planners, investment advisers, and lawyers.
5. Monitoring and reassessment: As time passes, one's personal financial plan must be monitored for possible adjustments or reassessments.

Typical goals most adults have are paying off credit card and or student loan debt, retirement, college costs for children, medical expenses, and estate planning.