Creating a Net Worth Workout Lifestyle

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Prepare … Then Just Do It

So how do you coordinate the four financial quadrants so they work together?

The more you work with your finances, the more it becomes a part of your everyday life and the more proficient you become at it. When you've reached the point where you've achieved "flow," that's when you'll realize the greatest benefit from using the workout. You also want to know where you're going and what type of conditions you may face.

Putting It Together: The Lifestyle Log

A great place to start is with the Lifestyle Log. And remember to congratulate yourself for having the courage to confront your situation! You're ahead of 99% of the rest of the world by doing these exercises!

Another good way to get accustomed to coordinating the quadrants is to go over your Net Worth Statement every three months, especially in the beginning. Like using the Lifestyle Log, going over the statement can help you coordinate the quadrants by seeing which assets are helping you accelerate your net worth and which liabilities are acting as a hindrance to growing your net worth.

If there is one thing I hope you understand by now, it's that The Net Worth Workout is ultimately about bringing control to the way you handle your money. It's not a "get rich quick" type of plan. It's about staying focused and disciplined. It's about being persistent and making a commitment. That's why I strongly recommend you track your Net Worth Statement every three months. This way you'll see the progress you're making from month to month and quarter to quarter. It will give you a perspective not only on where you're coming from, but where you're going as well.

Make a list of what you consider to be your current strengths and weaknesses in each quadrant. For help you can look at the Sample Strengths and Weaknesses on pg. 189 of The Net Worth Workout. Write down as many as you want for each quadrant. Once you have spotted your weaknesses, write in next to them what you are going to do to change them and write a specific date that you want to have this accomplished by.

How Much Do I Really Need to Retire?

If you're like most people, you probably think that you'll be able to scale back your lifestyle once you retire. You might be telling yourself, "I won't need the $3,000 a month I'm living on right now. I can make due just fine on $2,000 a month." That may be true. But the fact is, according to a 2005 Oppenheimer Fund survey, almost 70 percent of retirees say they spend the same or even more than they did when they were working. No wonder 98 percent of retirees regret how they spent their money before retiring! Will you have regrets like that? Let's make sure you don't!

For one month, experience living on your retirement budget and track your spending very closely. That means if you play lotto or treat yourself to that afternoon cappuccino you should make a record of it. Once you have a good idea of what you'll be spending, the Retirement Worksheet on page 210 of The Net Worth Workout will show you if you have a deficit, or even a surplus!

If you find yourself coming up short and feeling deprived (e.g. you missed saying yes to those friends that invited you out to dinner or for a weekend away), you need to rethink what you're saving and how it's being invested.

Moving Forward

Start a three-ring binder and divide it into the four quadrants. In the Earning section you can insert your most recent pay stub and your Net Worth Statement.

In the Spending section include your Lifestyle Log, checking, and credit card statements. As you receive these statements, track and update your spending, paying close attention to your Leaky Wallet Syndrome. Each month try to reduce your LWS by 10%.

The next is Saving. In here, keep a record of what you're adding each month to the mid and long-term goals you've set for yourself. This is also a good place to keep statements for Savings Accounts, CDs, Money markets, etc. if they're separate from your checking account.

Finally, in the Investing section, keep all your statements from your 401(k), IRA, Mutual Funds, Annuities, Cash Value Life Insurance, and so on.

Finally, place your Goals at the front of your three-ring binder so that every month or quarter when you go to this binder, you'll remind yourself of where you want to be a year from now and keep yourself focused.

Best of luck and may you always be healthy, wealthy, and wise!

Discussion

1. Pick two of your strengths and share them with the group.
   
   
2. Pick two of your weaknesses and share them with the group.
   
   
3. Talk about some of the solutions for your weaknesses with the group.
   
   
4. Now that you have a sense of where you stand today, imagine it is one year from now. Where do you want to be? How much are you earning, spending, and saving? What is the rate of return you want to obtain on your investments? How much debt have you paid off? How much has your home or other real estate appreciated? (Hint: Five percent is reasonable.)
   
   
5. Have you met any of your financial goals recently? Have you renovated your home? Sold it? Retired? Started paying for your child's education?