Financial statements reveal the financial position of a person, company, or entity at a specific point in time. Create your own personal financial statements so that you are able to see and understand your current financial position.
According to President Spencer W. Kimball, every family should have a budget. Every family should have a budget in order to track what money we receive and what money we spend.
The process of crating an effective budget has four steps: (1) Know what you want to accomplish, (2) track spending, (3) develop a cash budget, and (4) implement the budget.
The main difference between the “Old Way” of budgeting and the “New Way” of budgeting is the way in which you pay yourself. In the “Old Way” of budgeting you pay yourself only after tithing and all expenses have been paid. In the “New Way” of budgeting, you pay yourself immediately, before all other commitments besides tithing. This difference in budgeting is so important because it forces you to pay yourself every month while living on less.
Calculate your net worth so that you know your financial position. Your net worth tells you whether you actually have value in the things you own above and beyond what you owe. If your net worth is negative, then this means you are living on borrowed funds. A good net worth depends on your age, but it should generally increase as you get older and move towards retirement.
