To improve your financial situation - you regularly must assess where you are and where you're going. Here's how to do that:

• Determine your net worth. You'll see at a glance whether assets are larger than liabilities - and whether you're making financial progress. A net worth statement also is handy when applying for mortgages and college financial aid. Add up assets (checking, savings, investments, house, personal property, etc.) Next add up liabilities (current bills, unpaid taxes, mortgage, installment debt, etc.) Now subtract liabilities from assets. If your net worth is positive, congratulations. If not, don't despair. Knowing your predicament is the first step toward correcting it.
• Start keeping records. Organizing your financial papers helps you know what's happening - and prepares your for tax time and possible audits. Keep IRA's in one folder, for example. File insurance policies (by type). keep financial institutions statements together as well as loans, real estate papers and tax records. Then show other family members where everything is located.
• Define financial goals. Once your know what you want, you can achieve it. Discuss each objective. Then write down how long it will take to reach your goal. List the cost and what you must save each month to afford your goal. Now start saving!
• Analyze cash flow. This exercise answers the question "where does all my money go?" Record all sources of income for the last year. Next, use your checkbook and credit card statements to list expenses. Subtract from income. Have a negative cash flow? Cut expenses so you keep more of what you earn.
• Create a workable budget. This gives you control over your finances. Just keep the budget flexible. Using your cash flow statement, project next year's income and expenses (by category). Include money for savings. By comparing what you've done in the past with what you hope to do, you can create a budget that works. If necessary, cut some expenses. Or, if there's money left, put more into savings.