Basic Financial Planning for Newlyweds
Step 2: Put Together Your "Ow-Ow" Statement
Your Initial Financial Plan:
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Many of you are probably already familiar with this basic principal of accounting:
Assets minus Liabilities equals Net Worth
When preparing your initial financial plan, one of the first steps is to calculate your net worth. To do so, you'll need to work through an "Ow-Ow" statement.
What the heck's an "Ow-Ow" Statement? An "Ow-Ow" statement is nothing more than a snapshot of what you OWN and what you OWE on a given day. On the "Ow-Ow" Statement, all you need to do is list all of your assets and all of your liabilities at their fair market value as of a certain date. You then subtract your total liabilities from your total assets to determine your net worth.
When preparing your Ow-Ow statement, please keep in mind that:
Your assets might include:
Your liabilities might include:
To help you prepare your "Ow-Ow" Statement, please view our completed example or print out our blank template. If you have Microsoft Excel, you can download the completed example and the blank template on networth.xls.
Time Saving Tip: The easiest time to gather information for your "Ow-Ow" Statement will be the month following the end of a calendar quarter, since most financial institutions send out statements to their customers as of the last day of each calendar quarter.
Have You Opened a Joint Checking Account Yet?
One decision you'll need to make right away is how to hold your money. You can either pool your money together in a joint account, keep your accounts completely separate, or use a combination of both methods. For most couples, pooling their money in one account seems to work best.
How About a Joint Credit Card?
Many newlyweds, to simplify their finances, open a joint credit card as well. Did you realize that there are a whole bunch of different credit card programs available? Luckily, the Internet has made it easy to compare different credit card opportunities that are available to you.
Here's some additional articles about your assets and liabilities that you might find interesting:
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