I have found that financial success is not difficult to get our heads around. It is more difficult for some of us to get our pocket books around it. But as far as understanding HOW to grow wealth, the concepts are not that hard.

Nearly 20 years ago I left college weighing around 170lbs soaking wet. Two years ago I tipped the scales at just under 215. This was not attractive. More than that, it was not healthy. I had been given relatively good health and 24 hours in a day, and I was not using either one well. A friend gave me the solution in a very simple phrase: Eat less and move more. This was, and still is, easy to understand. It was an altogether different thing to accept and carry out. After a few false starts on one exercise program or another, I decided to make one change: to weigh myself every day. That’s it. I would make no other changes or commitments. I would simply know what I weigh. Remarkably, six months later, I was under 200, and for the first time in a decade, earlier this year I went just below 190. One simple decision, and the results followed.

Truth be told, during the holidays, I’ve watched myself rise to nearly 200lbs again. But my angst to get back down below 190 has been rising, and I am sure that I will not let myself go back to where I was.

I am convinced that for most of us the same is true with respect to our money. We have been given much. To be here in this country, at this time in history, with health, and in an economy that can still support almost everyone who wants to work, we have a lot to be thankful for. And yet, many of us are not getting the results that we want in our net worth and investments. We are not saving as much as we’d like. Our debt is not going away like we had hoped it would. We don’t seem to be getting ahead. We try one guru’s book, and we sign up for another guru’s plan. We promise ourselves that we’ll save more and give more, but just as we’re ready to make the investment, the car breaks down, or another tooth comes in crooked. There goes the extra.

I submit to you that what is needed first is not a better plan. What is needed first is for you to know your numbers. Weigh in regularly. Make it honest. When I wanted to lose weight, I made sure that I weighed myself first thing every morning. I made it part of my daily routine. I soon began to see the relationship between my eating and activity and the weight. I started to be able to roughly guess where I’d be simply by thinking about what I did or didn’t do, and what I did or didn’t eat. I wasn’t always right, but surprisingly, I was often dead on.

In order for you to make progress toward your financial objectives, you need a plan and you need a goal. But in order for either of those components to work, you need to know your numbers.

I suggest three reports to be reviewed as often as 10 to 12 times per year…

Profit and Loss. This is simply a review of how money flowed through your personal accounts. Income from all sources is added up. Expenses or payments are added up in a few categories (keep this simple). Did you spend less than you took in? Did you spend more than you took in? Look at this monthly (or at least annually) to know if you are in the habit of living within your income or if you are spending more than you take in. If I had to choose only one of these reports to start with, it would be this one.

Counter-intuitively, spending money to make this happen is a good idea. When I was going through a very difficult financial period a few years back, I asked the bookkeeper of my company to keep my personal books as well. She entered all of our personal spending and income into a spreadsheet every month and sent it to me. Often times, when things are not going great, the last thing I want to do is step on that scale. Force yourself. Know your numbers. This information is key to your changing habits and making progress toward your goals.

A balance sheet. This includes an accurate balance for all of your financial accounts and a consistent method for valuing non-cash assets. Take a month-ending balance of all bank and credit-union accounts. Use the end-of-month or quarterly investment account statement balances. More importantly, if you have debt, write down each one separately with its current balance. Compare this to the last time you wrote it down. Include your mortgage, your credit card balances (if you don’t pay them in full each month), your car loan balances (not leases; a leased car is not your asset). For the home’s value, I suggest using your state’s taxable value factor—this keeps it objective. Get a blue-book value on each car and use that number all year. I generally don’t count any other assets like furniture or guns or other stuff we own because these things are rarely worth what we paid for them. Consider them more as consumables.

Add up the assets, and add up the liabilities. Subtract liabilities from assets. This is your net worth. This should, in theory, always be rising, with the exception of those who are in later retirement or investing in a new venture.

Your investment account statement(s). This is a statement from your investment management company (401k, IRA rollover, Roth IRA, mutual fund statement etc.) that must have as a minimum the following information:

• total cost you’ve paid in your portfolio explicitly
• the return you’ve achieved in your portfolio
• the return that the market achieved for the same period as your fund
• the difference between the amount of money you’ve put in and the current balance of your fund
• total deposits and withdrawals you’ve had for the period

This information will allow you to hold your advisor accountable to the investment policy you signed up front and will insure that you never deviate from market returns. Without this information you have no idea what is happening to your investments.

Once you have a method for measuring the numbers, you can then set goals and devise plans to reach them. Unless you are willing to know these things, you have to agree that you are at some level ignorant of necessary information for achieving any kind of meaningful goal. I would go further to say that even if your goals do not include increasing your wealth, but simply being a good steward of the resources you have been given, that at a minimum an annual look at the above three statements is necessary.

In the past ten years I have benefited greatly from knowing my numbers. I believe that had I not regularly “weighed myself” financially I would have come to some degree of financial ruin—bankruptcy, foreclosure or both.

In 2004 and 2005 I built a home and purchased land that at the time was as much as I could afford. I was not in the habit of checking on these numbers regularly, and when I did look at them I used value estimates for real estate that were on the high end. I also used optimistic numbers related to income and expenses that made it appear I was better off than I really was. I did not account for the kind of market corrections that we all know now are quite possible. My retirement portfolio was growing as was the value of my real estate—a total of six separate parcels/homes, all but one of which were mortgaged. I was making payments on them, but I was close to the edge of financial hardship and didn’t know it.

You could say that I found myself overweight and headed for a financial version of cardiac arrest. All it would take is a catalyst of some kind, and my over-exposure to debt and real-estate investments would become a problem. Not only did such a catalyst arrive quickly, it arrived in the form of a mortgage and Wall Street correction, the likes of which had not been seen in 80 years. Deriving all of my income from activity in these two arenas, I quickly found my income drop to nothing—less than nothing for a short period. I was in trouble.

The first thing I did when I realized that I would have to miss a payment on one of my loans was to take inventory and run the reports above. It was very clear that my income was not going to meet the minimum payments and that my net worth was not as positive as my optimistic outlook suggested. I started keeping a monthly or every-other-month balance sheet and income statement. When income came back into the picture I was able to send the resources to the most important places. By doing this over a five-year period, I have been able to pay off one third of the debt, including all credit cards, car loans, much of the mortgage debt I once had, and a number of medical bills—we’ve had six children during this same period of time!

I can tell you from personal experience that knowing the numbers is a regular accountability that I will not quickly forego. I have stood at the edge of my own fiscal cliff, and the view was anything but pleasant. No, I have learned my lesson. I will know my numbers.