New Blog Posting: Happy New Year — Systems not Goals!

Posted in Financial Planning, Net Worth, Retirement Planning, Tips on by .

I recently read an article that comforted as well as inspired me. The idea is that goals, like New Year’s Resolutions, are scary and sometimes can be more discouraging than motivating. They also imply immediate results, which is often an unrealistic expectation. (

A more effective way to begin the year may be to focus on systems. Developing systems or habits designed to attain your goals can be more satisfying and surprisingly more effective in achieving desired results.

How does this idea apply to your financial life? Well, financial goals seem to overwhelm people.

Just mention saving for retirement and you will hear: “I’ll just have to work forever” or “I don’t have enough money to save for retirement.” The mere mention of a major financial goal like retirement is so big that most people want to give up before they start!

So, we are going to devote the first few blog postings of the year to providing tips on how to start creating some financial systems that set you up for success.

At Ithaka we have a guiding theorem:

Awareness +Action+Accountability = Financial Empowerment.   Full awareness of your financial situation is a requirement for success. What is financial awareness? It’s answering the questions: How much do you have? How much do you owe? Where is your money? What are the password/account numbers? Where does your money get spent? Our experience shows us that awareness alone motivates most people to get closer to taking action, ie. organizing, saving, investing. Adding an accountability component,(to a partner, a planner, a friend), you exponentially increase your chance of achieving financial goals and increasing your wealth.

So let’s the start the year off with a simple step that will help you with your Awareness.

Step 1:  Calculate Your Net Worth

No big math here.  Just gather up your most current statements from bank accounts, retirement accounts, cash value of life insurance, investment accounts, cds, stocks and bonds.  Next, if you a home owner, look up the current market value of your home on Trulia, Zillow or some other 3rd party service.  Finally, list the cash value (if you had to sell in a week) of any major personal property, cars, jewelry etc.  Finally, add up all the items.  These are your Assets.

Next list all the money you owe.  Medical debt, credit cards, your mortgage, your car loan and any other loans or debts.   Add this all up and these are your liabilities.

Assets minus liabilities equals your Net Worth.

Now study your document.  Try to be non-judgmental about what you see, but make some observations about the result.  What makes you happy? What bothers you?  What you would like to change?

Knowing the details of your Net Worth is like looking in the mirror.  You may see your document and be pleasantly surprised or immediately think of a way to improve.  By calculating your Net Worth, you have taken an important first step in becoming aware of what you have. There is no precise rule of thumb of what your Net Worth should be at various ages or incomes.  However, an important way to  prepare yourself for retirement is to eliminate non-mortgage debt and work towards saving approximately 20% of your income.

Let us know how this goes!  By having a system to look at your Net Worth each year we are willing to bet you will be more accountable to your own financial life!

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