Inventory

• Take inventory of your assets by preparing and updating a balance sheet. It shows assets, liabilities and net worth, which is the difference between assets and liabilities. Assets include homes, cars, savings accounts, Treasury bills and mutual funds. Record the most recent market value for these assets or the value in the latest financial statements. Liabilities include student loans and credit card balances.
  
  

Track

• Track the cash inflows and outflows. Ask your household members to write down their daily or weekly spending. Tracking cash inflows is easier because you can read the amounts from paychecks and contract invoices. Prepare a paper form or software spreadsheet with categories and subcategories to track the spending. Examples of spending categories include housing and entertainment. The subcategories include rent, utilities and repairs for housing, and restaurants and movies for entertainment.
  
  

Budget

• Learn the basics of budgeting, which involves listing your income and expenses by month. Budgets can help you match revenues to expenses, avoid cash flow shortfalls and set aside an amount each month for investments. A personal or household budget is similar to a company budget in that it forces disciplined recordkeeping and spending.
  
  

Pay Down Debt

• Pay down your loans, credit card bills and other borrowings. Start with your credit cards because they usually have the highest interest rates, followed, in order, by lines of credit and other borrowings. Borrow money only when you are also adding assets, such as a mortgage for a home purchase or a line of credit for major renovations. Do not carry a balance on your credit cards because they are a significant drag on cash flow.
  
  

Invest

• Learn the basics of investing. Do not assume that your financial planner has all the answers. The Internet makes it possible for an average investor to research individual companies, review stock prices and trade securities without having to leave the home or spend any money. The performance of your investments could determine how much your have at retirement. Know your risk tolerance level. For example, if market volatility makes you uncomfortable, stocks may not be right for you. Learning to control your assets also means ignoring rumors and basing investment decisions on the company fundamentals.
  
  

Monitor

• Review your financial plan and investment performance regularly. Make the necessary adjustments, such as cutting back on expenses to increase your savings or replacing underperforming investment assets in your portfolio. Talk to your lawyer for your estate planning needs.