Step #1 - Know where you are - PART 1

Step 1 - Know where you are: This is obviously the first step you will come across in any planning. Whatever you plan to change, wherever you plan to go, you need to know where you are now.

Before you start any journey, I am sure you have a map in your brain's eye showing the route. Destination is important. To get to your destination, you must first know where you are.

Getting to know where you are now is an art and science. Some get to know where they are easily, some fail to do so. There are 3 types of "where you are":


1) The REAL "where you are", the truth
2) The "where you are" you think you are
3) The "where you are" others think you are

The REAL "where you are" is what we are going to discuss in this topic. It is not easy to get to the REAL "where you are". Many find that they have to be really honest to themselves to arrive at the REAL "where you are". To achieve Financial Freedom, you must know where you are at any point in time.

Many lessons on finding out "where you are" suggest you to take out a sheet of paper, and write down your Income Statement and Balance Sheet. Yes, this is the right way. You might find it easier if you have a history of income and expense record. After drafting out your income and expenses, you will have a clear view of what brings you income and what causes you outflow. If you find that you have only one Income source, you have to find ways to increase the number of income sources. It will be safe if you have at least 3 income sources. This is called Multiple Sources of Income, which will be covered in later chapters.

After finding out your current finance situation, which is your Income Statement and Balance Sheet, it is time for another crucial exercise. This is uncommon: Write down your hobbies and activities in a column. To the right of each of your hobby and activity, write down whether they create income or expense. Then, proceed on writing down the estimated amount of each income and expense. It is common to have more expense than income. Hobbies and activities usually cause outflow. Do not worry, we will cover more on How to Turn Expensive-Hobbly into another Income Source. This is a knowledge which deserves celebration. There are many possibilities. While many are spending for their hobbies, others are making money out of them!

So now you know 2 situations:
1) Your Finance Situation
2) Your Passion Situation

Later in the chapters, we will look at how to
1) Increase sources of Income
2) Decrease unnecessary expenses
3) Reduce Debt
4) Make money with Hobby

Thanks for reading and see you next time!