In my previous column, I talked about developing a family financial mission statement. The concept of a mission statement comes from business. In addition to a mission statement, other tools are available that individuals and families can borrow from business to make their personal financial planning successful.

Think of your financial situation as your personal corporation. If you were given a chance to buy stock in yourself, would you do it? When stock is sold through a stock broker, prospective buyers are encouraged to read the company's annual report. This would include certain financial statements giving an indication of how solid or shaky the company's financial situation might be. There are tools that tell you about your own personal financial corporation financial situation as well.

Corporations and individuals want to know the following: How do assets such as property, stocks, certificates of deposit, etc. stack up against the loans you have? Could you summarize how your income and expenses balanced last year? Do you have a plan for this year? Have you projected your income and expenses so you can continually monitor your plans? If you haven't done any of the above, you are not unusual. Most people operate on the checkbook system. If there is money, spend it. If there isn't - whoops, what do we do now?

People can benefit from using the same tools that businesses use to manage their finances. These tools, which are not complicated, provide peace of mind in guiding you so you can do what you want to do. If you want more money to invest in financial security, your challenge is to get it. If you want to accomplish a goal and so far you haven't succeeded, try putting your money management system into a business format.

Use the following tools in your personal financial plan: 1) a balance sheet, 2) a cash-flow plan and 3) a cash-flow worksheet for keeping your spending in line with your cash-flow plan.

A balance sheet lists what you own and what you owe. The difference between the two is your financial picture. If you own more than you owe, then you have a positive net worth. If the opposite is true and you owe more than you own, then you have a negative net worth. If you do a balance sheet at least once a year, you'll get a good idea whether you are progressively increasing your value (net worth) or if it seems to diminish every year. (For more information, check out the Web at www.pncbank.com/personal_finance/0,3810,3784,00.html.)

In my next column, I'll describe each of these tools and point you to some Web-based resources where you can plug in your own information.


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