As people move through their adult lives they are often blissfully unaware of their financial situation – you can coast from one paycheck to the next and not give any real thought to your long term circumstances. Then all of a sudden you will need to get a home loan, and find you have no idea what you can afford to do. Before it gets this far you should do a quick assessment of your situation to see what your financial situation is.
First of all you need to see how much money you have in investments and bank accounts – this seems obvious yet as people split their funds they often lose sight of how much they actually have. It is quite easy to find out how much you have in your accounts as well as the value of your stocks; discovering the worth of property investments is a bit trickier and you might need to conduct a valuation. Once you know how much money you have you will be able to figure out where to go next in your financial life.
Valuing your home and other property is a very important step, especially if you want to take out any loans. You can take the values of your house to your bank to serve as collateral – this is a risk as you can endanger your property ownership, yet it will allow you to take out significant sums of money for emergencies and major purchases.
Finally, you need to take a detailed look into the negative side of your financial situation – this is far less pleasant yet it is the most important part of assessing where you are at. Many people avoid this at their peril. Look into your debts, mortgages and any other obligations such as childcare, rent and taxes. This might be a tad depressing yet it will allow you to go forward with a realistic picture of what you can afford – ultimately, this is for the best.
If you go through these three steps you should be able to get an accurate picture of where you stand from a financial perspective – this is incredibly important as it will inform every step you take as you go forward, hopefully into a secure and prosperous future.