We all want a better life! To have a good job or career. Make reasonable income. Be able to prioritize and budget. To be able to straighten out any debt or credit problems. Maybe buy a home or refinance a mortgage? To be able to save, invest, and retire, properly? How does one do that? Is their a magic formula?

In short, yes. And it is called the financial planning formula. Or in short, ask yourself: Can you analyze where you are today? To get where you what to be tomorrow and the plan to get there for the future? Of course you can.

But before we talk about tomorrow, let’s first talk about today!

How do you analyze where you are today? By figuring out your net worth.

What is that? Well, there are many official definitions. I’ll give you my simple one: It is how much you are worth today!

What is the formula:
1. Assets + Income
2. Liabilities + Expenses
3. Then subtract (-)
4. Net worth is positive or negative

Assets are what you own! A house, a car, money in the bank, and investments. Your retirement plan. Your valuable belongings.

Income is, of course, your earnings, not just from work, but from wherever you receive your income, whether it’s money in the bank, to gambling income, to unemployment insurance. Liabilities is what you owe. And no I don’t mean your monthly bills. I mean your debt: whether it’s a mortgage, student loans or credit card debt

Expenses are your monthly bills, from housing to medical bills to car insurance to toothpaste and toilet paper- and everything in between

So Sam has assets, a home, life insurance, and personal valuables. Based on his estimation it’s worth about $400,000. Sam has income, he workers hard and receives $200,000.

Sam also has liabilities: A mortgage, credit card and student loan debt that total $500,000. Sam likes to live large, so he has many big and small expenses from the monthly mortgage payment to the dog food and everything in between. Annual expenses $150,000.

Thus, Assets + Income = $600,000
Liabilities+expenses = $650,000
Then subtract. Total Net Worth- $50,000

So while everyone sees Sam’s home, car, nice jewelry, wonderful spending habits, he’s basically broke. Even worse, in debt.

Which means Sam has very little chance of achieving any long-term goals because we now can see where he stands today. Let’s hope Sam understands that he now has to make some serious short-term adjustments, to get where he wants to be, tomorrow and in the future.

How do you stand today? A positive net worth? Or, like Sam, a negative one?

Professor Anthony Rivieccio, MBA PFA is the founder and CEO of The Financial Advisors Group, celebrating its 24th year as a fee-only financial planning firm specializing in solving one’s financial problems. Mr. Rivieccio, a recognized financial expert since 1986, has been featured by many national and local media including: Kiplinger’s Personal Finance, The New York Post, News 12 The Bronx, Bloomberg News Radio, BronxNet Television, the Norwood News, The West Side Manhattan Gazette, Labor Press Magazine, Financial Planning Magazine, WINS 1010 Radio, The Bronx News, thisisthebronx.com and The Bronx Chronicle. Mr. Rivieccio is also currently an Adjunct Professor of Business, Finance & Accounting for both, City University of New York & Monroe College, a Private University. Financial Focus Interactive is now an app and a place where one can: Read, Listen, Watch Talk & Learn about Financial Solutions with like minded people and a live financial advisor. Financial Focus Interactive app can be found on the Google Play Playstore or on or internet app at : https://www.financialfocus.app For financial assistance, Anthony can be reached at (347) 575-5045.