Your personal economy: what really matters to us!

These days there is a lot of talk about the economy, recession, depression, or whatever you want to call it. Some say it is improving and some say it is getting worse. It is all a matter of perspective. We are all affected by the economy as a whole. What really matters is how your economy is doing.

Your personal economy consists of:

• Your job/income
• Your net worth
• Your expenses
• Your ability to weather bad times
• How you are managing the above factors
  

You can have a surplus or shortage of any of the above. In this case we all want a surplus in all of them except expenses. If we have a shortage in any of them it affects our daily lives and what we focus on as we move forward in life.

Personally my "economy" is in a long recession since I am digging myself out of a lot of debt (surplus expenses). My job/income is OK for the moment and my net worth and ability to weather the bad times (emergency fund) are growing each month. I am on my way to recovery and hopefully growth!

There are many things that can cause a change in our personal economy. Here is a list of the major events that can make a big change positive or negative:

• Job Loss
• Raise
• Inheritance
• Buying a home
• Running up a credit card you cannot pay
• Having a child
• Getting Married
• Getting a second job
• Being frugal

The above list can go on forever. All the choices we make in our lives affect our personal economy in some form or fashion. Some will help us out financially in the long run while others will hurt us financially. It's a fact of life. The goal is to have more positives that negatives so we come out on top!

Doing an annual financial review is a good way to gauge your personal economy. Its a yearly "how am I doing" and "where am I going" exercise that we all should do. I find that tax season is the best since you are already digging into your finances from the past year anyway to file your return. Give yourself a personal economic checkup today!