In order to keep myself busy and sane during these months of stay at home lockdowns, I’ve turned to jigsaw puzzles as a way to get out of my mental rut. I don’t spend a lot of time on the puzzle just a few minutes here and there, but it’s surprising how fast all those little pieces come together to form a clear image.

As I was working on assembling a picture of 16 little Volkswagens, it occurred to me that getting a handle on your finances is just like assembling a jigsaw puzzle.

The starting point is that you want to do it. You make the effort to find a puzzle in the mountain of stuff in the back of the closet or you go to the store to pick out one you think you’ll enjoy doing. In the same way,  getting your finances organized means making an effort to gather up all your financial information so you can analyze it.

After you open the box, all the puzzle pieces get dumped on the table. Sorting them out by dividing all those little pieces into different piles is similar to sorting out your finances.  

You’ll separate the ones with the straight sides that make the outer frame from the others. The frame is similar to your income and outgo. They form the boundaries of how much is available to spend and how much you actually spend. You certainly are able to spend more than you make, but if that’s your long term plan, it’s not sustainable and your final picture will be lopsided.

After the edge pieces, the rest are sorted into piles of reds, blues, greens, yellows and greys. The red and green pieces make up your new worth statement, which is a way to check your financial health. A net worth statement shows your financial position at a given moment in time, like a picture. It shows the dollar value of what you own (assets) and what you owe (liabilities or debts). The assets minus your liabilities equals your net worth.

An updated net worth statement can be helpful when making financial decisions.

The green puzzle pieces are your assets. What do you own that’s worth money if you sell it? This includes items such as the house; cars and other vehicles; bank, savings and investment accounts; and personal possessions such as clothes, tools, electronics, etc.  List all your assets and an approximate worth of each. It does not have to be precise number, just a ball park figure of the item’s worth. With small items such as clothes, estimate an overall value for everything.

The red pieces of the puzzle are your debts, which include student loans; the mortgage; car loans; credit card balances; medical bills, and any monthly bills that are past due. Debts also include money you owe to people like good old Uncle Fred who loaned you $500 when you were in a pinch.

The piles of other colored pieces are the different ways you spend money or make money. In addition to debts, you spend money on  transportation, medical expenses, food, clothing, tuition, giving, utilities, maintenance, entertainment, gifts, etc. In addition to the income from your employer, maybe you receive money from investments, social security or a part time job.

As you sort through the piles of financial obligations a pattern starts to form. Are you spending too much here or not enough there. Are there missing puzzle pieces – those things you don’t have in the budget, but should. Ways you could save money but don’t, or ways you could earn extra income but haven’t expended the effort.

The picture of the assembled puzzle on the box represents your goals. Just as you keep looking at the picture on the puzzle box to see where the pieces fit and if you are putting the puzzle together correctly, it’s hard to have an organized financial life if you don’t have goals which set the scene for how much you earn, spend, save and give.

Most people have all the puzzle pieces, but they are scattered all over the place and there is no picture (goals) to help them make decisions to move in a direction that will meet their ultimate goal. The goals could be saving for retirement, funding college costs, paying off the debt, or remodeling a room in the house.

It’s important to sort through the various financial pieces and integrate them into some semblance of logic and order. Tackling your financial situation helps you understand how to control your spending, pay down debt and reach your goals.

Hopefully, the picture of your goals includes being a good steward of the blessings God has given you.  Even though you may think differently, we really own nothing in this world.  Rather than being owners, we are stewards. What identifies a steward? The Catechism of the Catholic Church provides several answers. “As Christian stewards, we receive God’s gifts gratefully, cultivate them responsibly, share them lovingly in justice with others, and return them with increase to the Lord”.

What the Church teaches is the responsibility of being a faithful steward through all the ups and downs of life. The key is not being wealthy. The key is to maximize the use of what you do have. We’ve known people who make 6-figure incomes who were on the brink of financial disaster due to overwhelming debt. We’ve also known people who make a modest income and have no debt. The key is being a good steward of what you have.

Once you’ve started to assemble your own financial puzzle it’s easy to get excited about a future with no debt or adequate savings for your highest priorities in life.

The Compass Money Map provides a step by step process for putting the financial pieces together in a systematic manner. That along with your personal financial goals will go a long way to making a beautiful picture of all the pieces.

Evelyn Bean

Cofounder, Compass Catholic

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