A Message from Bob Dreizler, Chartered Financial Consultant:

For more than two decades, I've helped people seek financial security while honoring their emotional and social concerns. During this time, I looked for but never found a practical and engaging money management book I could recommend to my clients, so I wrote Tending Your Money Garden.

As a specialist in socially conscious investing, I enjoy educating people about how their investing habits can impact more than just their assets. I hope this column will help you enhance your financial situation so you can fulfill your dreams.

Year-End Balance Sheet

New Year's Day offers a wonderful opportunity to shake off your reveler's haze and focus on making financial commitments. What do your personal finances look like? How do they compare to last year? Commit to making a personal balance sheet--and revisiting it at the end of every year--a permanent New Year's resolution.

So what is a balance sheet? Businesses use balance sheets to determine if their financial situation has improved when compared to a previous date (i.e., year to year or quarter to quarter). Companies compile lists of their assets (what they own) and their liabilities (what they owe).

Similarly, you can use a balance sheet to develop a snapshot of your current financial situation. If your total assets exceed your liabilities, the excess constitutes your net worth. If, on the other hand, your liabilities exceed your assets, let's just say you are "asset-challenged."

First list the value of your assets, such as:

Personal residence
Other real estate
Retirement plans
Mutual funds and stocks
Savings accounts and certificates of deposit
Checking accounts and cash
Jewelry, cars, antiques, etc.

Then list your liabilities or debts, such as:

Long-term liabilities such as home mortgage
Medium-term debts including car loans and lines of credit
Short-term debts such as tax obligations and credit card debts

January is the ideal time to conduct this exercise since tax, mortgage, and investment statements arrive with actual figures for many of these amounts. You will need to estimate the value of certain assets, such as your home or other real estate.

Completing this project for the first time can be a formidable but educational exercise. And next year, it will be much easier since your categories will already be in place. The specific dollar amounts of these figures is not as important as your diligence in keeping track of them and making a careful comparison year to year. And hopefully, as your asset base grows and your debts diminish, creating your year-end balance sheet will be a motivating experience and the easiest of your resolutions to keep.