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Before you can attain your goals, you must first understand where you are financially. To do this, you must prepare the various financial statements described in this section. Of these financial statements, the most important is your budget. Following your budget is critical to living within your means. You must know what income you have coming in and what income you are spending.

In this section, I have recommended a new way of budgeting. Instead of saving what is left over at the end of the month, I have suggested that you determine your income and then pay the Lord first, pay yourself second (between 10 percent and 20 percent), and budget and live on the remainder. This practice will help you save for your goals much more quickly and will greatly improve your chance of attaining them.

I also explained the importance of using your personal balance sheet to create a snapshot of where you are financially to help you calculate your net worth. Remember, your net worth will change depending on where you are in life, and ideally, it should get better over time.

Finally, I touched on the personal income statement and explained specific ratios that can help you see how well you are doing with regard to liquidity, debt, and savings. Ideally, these ratios should also be improving over time.

Elder Joseph B. Wirthlin commented:

I advise you to be patient in financial matters. Avoid rash or hurried financial decisions; such decisions require patience and study. Get-rich-quick schemes seldom work. Beware of debt. Be especially careful of easily obtained credit even if the interest is tax deductible. You young couples should not expect to begin your married lives with homes, automobiles, appliances, and conveniences comparable to those your parents have spent years accumulating (Joseph B. Wirthlin, “Patience, a Key to Happiness,” Ensign, May 1987, 30).


The purpose of this section was to help you measure your financial health and make a plan to improve it. It isn't enough to understand financial ratios: you must be willing to implement changes in your financial life to improve those ratios.

  1. Will you develop and implement a budget?
  2. Will you calculate your net worth using a personal balance sheet?
  3. Will you develop a personal income statement and use it to analyze your spending?


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