If you have long-term financial goals (be it saving money for a specific goal or eliminating credit card and/or student loan debt), you will need to take inventory of the value of your assets. It might seem overwhelming at first, but if you follow the proper procedure, you will be able to make much more educated decisions regarding your finances than you would otherwise.
Why Take Inventory of the Value of My Assets?
There are quite a few reasons why, such as:
- If you know how much you have, you’ll be able to know what you can and cannot afford in the long-term.
- If you know what you cannot afford, that you need to, you will be able to strategically plan a budget.
- If you finalize a budget that works, you might take inventory of the value of your assets on a later date and find you are much better off than you were previously.
- Should something catastrophic, such as a natural disaster, occur to your home, a detailed inventory log will save you from even further stress.
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In the beginning, you’ll need to do an overview of what you own and the expenses involved. First, determine how much is in your bank account, checking and savings combined. Then, you will need to consider other things like your house and your car. Along with this, you need to consider associated liabilities. For instance, your home value might be $500,000 and your car value may be $40,000, but if you have mortgage and car payments to work through, that will affect your net worth, and ultimately, your assets. It’s normal to owe money on your house and/or car; just make sure you keep track of this so you aren’t overestimating your assets. By definition, your net worth is how much your assets are worth, minus any liabilities that you have. It doesn’t matter how valuable your car is if you have defaulted on payments and have collection agencies calling you constantly about past due bills.
Remember: not everything valuable you own is tangible. If you have investments in any stocks and/or bonds, you should figure those into your calculations. You will need to consider factors such as market value of these investments and how many of them you own.
While you might elect to take inventory of your assets with a pen and paper, there is software specially designed to help you with the process, at affordable rates as well. The top-rated types of home inventory management software range in price from $14.99 to $39.99. These types of software will aid you in your inventory experience with their sophisticated cataloging and user-friendly interfaces.
In Case of Emergency
When tragedies like a fire, hurricane, tornado, or anything else causes severe damage to your home, you will want to file a claim with your insurance provider and hopefully receive compensation for any items you have lost as a result of the damage. However, if you don’t keep track of your physical assets, it might be difficult to file a claim. If you keep a detailed, updated inventory log of what you own, your chances of receiving compensation from your insurance provider will be greatly increased.
Taking inventory might seem like a tedious process, but it is a decision you will not regret. Plus, with all the software available, it is now easier than ever.