The First Step Toward Prosperity
If you feel like money slips away before the end of the month, can’t save a minimum amount, live only paying the minimum on your credit card, or simply don’t know how much you spend on essentials, it may be time to stop and take a closer look at your financial reality. The first step to change this scenario is conducting a personal financial diagnosis.
Many people believe that a financial diagnosis is only for those in debt or wanting to start investing. In fact, it is essential for anyone who wants to live with more financial peace, make conscious financial decisions, and follow the path to prosperity with security.
What is a Financial Diagnosis?
A personal financial diagnosis is a structured process of analyzing your financial life. It involves gathering all possible information about your income, expenses, debts, assets, spending habits, and financial commitments. It’s essentially a “snapshot” of your current financial situation.
Unlike simple expense tracking, a financial diagnosis has a more strategic purpose. It reveals patterns, shows imbalances, identifies paths to improvement, and serves as the foundation for any future decisions—whether it’s cutting expenses, starting to invest, planning for retirement, or completely changing your financial lifestyle.
Why Is It So Important?
1. You Stop Walking in the Dark
Many people avoid looking at their finances because they fear what they might find. It’s the famous “if I don’t look, the problem doesn’t exist” mentality. However, the truth is that the longer you delay confronting the situation, the harder it becomes to get out of the hole.
Doing a financial diagnosis is like turning on the light in a messy room: you’ll see the mess, yes, but you’ll also be able to clean and organize it. Without clarity, there is no planning. And without planning, there is no prosperity.
2. Identifies Self-Sabotaging Behaviors
Did you know that small daily expenses, like that coffee shop latte or the delivery app you use without thinking, can cost you hundreds—or even thousands—of reais over the course of a year?
A financial diagnosis exposes these patterns. You might discover that you are spending more on subscription apps than on healthy food, or that an outdated cell phone plan is costing more than it should. These are adjustments that, when accumulated, make a huge difference.
3. Opens the Way for Better Decisions
Without knowing how much you earn, spend, and owe, how can you make smart financial decisions? A diagnosis is the foundation for any future plan, whether it’s paying off debt, going on vacation, buying a property, or starting to invest.
With the data in hand, you can set real goals, adjust your lifestyle to your financial capacity, and, most importantly, evolve consistently.
How to Conduct a Personal Financial Diagnosis in Practice?
Conducting a financial diagnosis requires honesty, discipline, and method. It’s not a difficult task, but it does require commitment. Here’s a step-by-step guide to make a thorough financial diagnosis:
1. Map All Your Sources of Income
The first step is to list everything you earn monthly. This includes:
- Salary
- Freelance or side income
- Rent or real estate income
- Alimony or benefits
- Returns on investments
It’s important to consider both active income (direct work) and passive income (investments, rent, etc.). If any of these are variable, estimate the average over the past three months.
2. List All Your Expenses
This is one of the most revealing moments. Here, it’s worth reviewing the last three months of bank statements, credit card bills, and observing your consumption patterns. Divide your expenses into:
- Fixed expenses: rent, mortgage, school, internet, health insurance, loans.
- Variable expenses: groceries, transportation, entertainment, occasional purchases, delivery, pharmacy.
Be as truthful as possible. Don’t omit small expenses out of embarrassment or because you think they are “too small.” Often, it’s the little things that sabotage the whole.
3. Calculate Your Monthly Balance
Subtract all your expenses from your monthly income. This result will be:
- Positive: Great! You’re spending less than you earn.
- Zero: Pay attention. This shows that any unexpected event could throw you off balance.
- Negative: Red alert. Your lifestyle is above your financial capacity.
This number is crucial to determine how much you can (or need) to adjust.
4. List Your Debts
This includes everything you owe: credit card bills, overdrafts, loans, mortgages, consortia, overdue installments.
For each debt, include: total value, monthly payment, interest rate, and repayment term. This overview is important for organizing a repayment strategy or even renegotiating debts.
5. Assess Your Assets
Now, take a look at your assets. List everything you own that has value:
- Bank account balance
- Savings
- Investments (Treasury Direct, CDB, stocks, funds, etc.)
- Real estate
- Vehicles
- Assets with resale value
Sum up the total value of your assets and subtract the total of your debts. The result is your net worth. If it’s positive, that’s a good sign. If it’s negative, you’ll need to pay extra attention.
Tools That Can Help You
You can use different resources to organize your diagnosis:
- Pre-made spreadsheets: there are free templates online that already come with formulas.
- Personal finance apps: apps like Mobills, Organizze, and Minhas Economias can help.
- Customizable platforms: tools like Notion or Trello, for those who like to build from scratch.
- Physical notebook: if you’re part of the analog team, this works too—the important thing is consistency.
Choose the format that’s most comfortable for you, but ensure it allows for regular updates.
When to Perform a Financial Diagnosis?
While it’s ideal to do this exercise at least once a quarter, it’s especially necessary during times of change, such as:
- Job change
- Marriage or divorce
- Having children
- Starting a new business
- Retirement
- Relocation
These moments affect cash flow and require a full review of your financial structure.
What Happens After the Diagnosis?
Once you analyze all the data, it’s time to move into action. Some practical decisions include:
- Cutting or renegotiating unnecessary expenses
- Exchanging high-cost debts for cheaper ones (such as personal loans or salary-based loans)
- Building an emergency fund
- Setting financial goals for short, medium, and long-term periods
- Starting investments according to your profile and goals
With a well-executed diagnosis, you stop working in the dark and start making decisions based on real data. This reduces money-related stress and boosts your confidence.
A New Perspective on Prosperity
Performing a financial diagnosis isn’t about cutting all pleasures or living in “sacrifice mode.” It’s about clarity, the power of choice, and awareness. It’s about viewing money as a tool for building a more balanced life, aligned with your personal goals.
When you understand exactly where you stand, it becomes much easier to move toward where you want to go. Freedom starts with information. Prosperity begins with intention.