What does your Net Value Declaration tell you about

A summary of all your assets and liabilities is a crucial first step to better control your finance. Before starting to create a net value spreadsheet, collect the information you can to make the best sense than you can tell you.

General net value (less liabilities assets)

The definitive view of a statement of net value is exactly what it says: the net number of the penaltywhich is simply less passive active. The number in isolation does not tell you too much, but it is a useful reference point for tracking over time. A negative clean figure would obviously indicate space to improve.

Debt ratio

To calculate your percentage of debts, you must add all the monthly payments of debt necessary, including mortgage payments, student loans, automobile loans and credit card debt. Then take the total and divide it by your gross monthly income (Pretax). The lowest is better for this number and any number greater than 43% Will probably create problems to obtain or refinancing a mortgage.

Emergency Fund

Most financial advisers recommend keeping at least Value of three to six months of life expenses monthly In cash or other low -risk and highly liquid assets to cover sudden work loss or other unforeseen events, such as car repairs, replacement of appliances or other residential repairs. Some investors may want to keep more than 12 months of cash expense if the variable remuneration is an important part of its total compensation.

Division of assets between partners

This question is usually presented in the context of divorce, but it may be worth considering for couples who think to remain married. Depending on the tax limits on property of your state and the possible future changes to the federal tax laws on real estate, it can be beneficial for couples trying to balance the assets of each individual. It is also important that each member of a couple has their own retirement assets.

Assignment of assets between taxable, deferred and real estate

There is no particular reason for which the allocations must be exactly one third, but the principle of equitable distribution helps to avoid out -of -balance assets in any particular area. In particular, it is advisable to avoid too large concentration in residential real estate because it is not particularly liquid. Investors should generally direct most of their savings to retirement accounts differentiated by taxes, but once they have accumulated a healthy balance, it may make sense to direct some savings to tax accounts.

Risk of a single business

If any actions have a large part of your net value, it may be concern. This is particularly true in the case of employer’s shares because it means that your human capital -the capacity to generate revenue and a living -and financial capital depend on the fortunes of a company.