There are a lot of tools out there to help you track your finances.
Most arrived after I started working (I never got into Quicken) and after I started tracking our net worth, so they are useful but they aren’t my “core system.”
For that, we use an old fashioned spreadsheet. 🙂
Our Net Worth Record is the first document in our family’s personal finance “binder” (the second is a word document I call a Treasure Map).
Table of Contents
Why We Track Our Net Worth
There are two reasons – to track our progress and to force a monthly check in on our finances. It also helps keep me sane when the world seems crazy.
(as an aside, it seems that on a daily basis I read horror stories on Reddit’s r/personalfinance forum where someone learns that for the last X years, his or her investments have sat in cash or some equivalent because they weren’t checking in on them -that’s your fault! Check in!)
Our Net Worth Record, as the Excel file is titled, is our financial dashboard. In seconds, I see a snapshot of our financial situation. I know how much cash we have to the performance of investments in the last month.
More importantly, I can leave notes each month to put it all in context when I read it later.
This document dates back to June 2003. That was my first month of full-time work, when I had a net worth of $8,745.69 ($4,519.44 of which was in a Roth IRA I started in college). Northrop Grumman just deposited my first paycheck and my signing bonus, which accounts for the other four grand. Without notes, I wouldn’t have remembered something like that from over 20 years ago. 🙂
It’s fun to watch the progression over the years and that’s one major reason for the document.
Since I update it monthly, I must log into our financial accounts to collect the numbers. When I log into each account, I review the transactions for the last month. Anything suspect is immediately obvious because I check in each month. I’m not seeing a 90-day old transaction and wondering what it was for, everything is within the last thirty days.
I use Empower Personal Dashboard (formerly Personal Capital) to help track our net worth, it’s one of my favorite tools and a great alternative to older systems like Quicken. It collects the data for me so I don’t have to log into each account separately. This saves me a ton of time each month while still letting me analyze all transactions. I don’t miss logging into each account and I love all the analysis tools it gives me to know if I’m saving enough for retirement. Best of all, it’s free.
Finally, it’s important to have a list of all of your financial accounts. This record is that list for us.
What Goes Into Our Net Worth
![Here's a template built off our Net Worth Record. [Google Docs]](png/net-worth-record-screenshot-1024x544.png)
Click to download a copy
(I won’t make you join our newsletter to get it but if you want to, click here to join!)
Every number gets included, from the value of our home and cars to bank statements.
Why do I include home value? Including home value is a big debate in some circles but it goes back to why I’m tracking our net worth – it’s to give us a snapshot of our situation. I set the value of our home at the purchase price and I include our mortgage as a liability. I opted to set it there for simplicity, but here are a few other ways to value your home.
As we’ve made improvements to the home, I’ve added those to the home value so that it roughly estimates our tax basis. This will be useful when we sell the home so we take advantage of the home gain exclusion.
If you were to include one and not the other, it would mess up your numbers. Include a liability with the asset you purchased and the numbers look lower than they should. Include home value but not the liability and the numbers look bigger than they should.
The same goes for cars and other non-income producing assets, which people often exclude from their net worth.
We don’t “mark to market” the value of the home. Unlike stock market investments, which you can sell “immediately” for the market price and a small commission, our home is the reverse. You can’t sell it in an instant for a small commission, it takes about a month and a few percent and the price depends a lot on local factors.
Given all those variables, re-evaluating your home’s value, up or down, doesn’t help and is a waste of time — so I don’t do it. I will include improvements but I don’t make changes based on the “market.”
We update the value of our cars. Since it’s constantly going down and the market is somewhat more liquid for vehicles, we include the slow decline in the value of our cars based on the Kelley Blue Book value. To be perfectly honest, I haven’t looked up the value of the car in several years so they’re actually valued at like 2019 KBB values. 😂
What Doesn’t Go Into Our Net Worth
Credit card balances do not get included. Since the credit cards are paid off in full each month, the balances are reflected in our bank accounts with each payment. I don’t mind the one month lag.
I still log in to look for fraudulent transactions (and I get transaction notifications) but I don’t record balances.
This means that our net worth is slightly inflated because our credit card balances, which should be a liability, are never and never included.
I don’t record “petty cash,” or cash that we have in our wallets. It’s a small amount and not impactful, so I don’t bother to go to that level of detail.
Final Thoughts
There’s no single right way to calculate your net worth, just your way. Just a way that gives you the information you need.
When you weigh yourself, do you take off all your clothes? Do you wear the same thing each time? Do you disrobe at the doctor’s office when they weigh you? Jeans are heavy. Your clothes weigh a few pounds and increase the end number… but do they make a difference?
It’s the same with net worth.
You can track different versions for different purposes. For example, we track our liquid net worth, which is my estimate of our net worth if we converted (“liquidated”) to cash and cash equivalents.
Do you track your net worth? If so, how? What do you include or exclude, and why?
I track my net worth. Sort of. What I mean by that is I don’t track my net worth on a regular basis — such as every week or every month — but I keep the numbers that go into the number readily available so that I can run it. Plus, after ten years of writing about money, I’ve run my net worth so many times that it’s sort of an automatic action! Also: Haha. I was checking to see how many folks use /blog/ (like I did at GRS) and I thought to myself, “Self, I’ll bet Jim is… Read more »
I track my net worth using the Mint app. I no longer use credit cards and pay for everything with cash. Car was paid in cash and mortgage almost paid off.
I pay for whatever I can on credit card. BUT, my secret is that the money comes out of relevant bank account and is deposited into the Visa payment account and is paid on the day. Win for me.
Some bills are paid by direct debit and comes out of the check account. I have yearly bills, think firewood, rubbish bin etc. I deposit $x per payday into the firewood savings account, wheelie bin account etc. That way I’m not scrambling for the money come yearly bill time.
You seem to have a solid system in place!
I also do something similar with Mint.com and have had great success. However I am intrigued by the excel spreadsheet. Is it something you would be willing to post/share (sanitised of course!).
-Brett
I went through and looked at the spreadsheet, it’s really just a row for each account and a recording of the balance at the start of each month. I have some calculations that I find interesting but overall it’s not a very exciting document. 🙂
Brett – I created a template and added it to the post. Here is a link to it.
As you can see, it’s very simple. 🙂
This spreadsheet is very helpful and has helped me identify what category of money is moving most each month (Credit Cards, Physicals, Investments, etc.)
one note for those that download it. column E on the assets tab is double included because it is a summary of Column F and G. so in the totals column (column B) it will be more accurate if you remove it.
Editor’s Note: This has been fixed in the spreadsheet.
My wife and I have been using this system to review our financial progress for the past couple of months.
Yikes, thanks I’ll update it!
I like working with spreadsheets as well. I have a net worth worksheet where I track everything coming in and mostly everything going out. I also include a percentages column to see what percentage of each category comprises my overall income and expenses.
I also track my investments on a separate tab to calculate yearly returns, cumulative returns and compound returns for the past 8 years. I only have to do this once a year but it’s always interesting to see how I’m doing compared to the S&P500.
It’s extremely valuable! Automate as much of the data collection as you can… the value is in the analysis, not the collection. 🙂
I update my car’s value with Kelly Blue Book every month. I created a deep link in the spreadsheet to KBB’s site to get me the new number right away. It’s faster than getting bank account numbers because there’s no logging in :-).
I don’t update the mileage very often. That actually approaches “work” and the estimate is close enough.
I use a deep link too, I just think updating too frequently doesn’t have a benefit… plus it makes the number go down. 🙂
It’s sad with things go down. I’m depreciating solar panels over 25 years and they go down. Fortunately a formula makes that easy and they don’t go down that much on a monthly basis.
As long as the drift downward is orderly, I suppose I’m OK with it. I just don’t feel like checking another thing even if it’s just clicking a link! 🙂
My net worth and money field manual are part of one, albeit a large one, password-protected spreadsheet. The first tab is sort of “the money field journal” where I include instructions on where the important documents are, instructions for what to do with life insurance proceeds, financial plan, family priorities, etc. Then a bunch of tabs: each year by month with income and expenses, list of accounts and encrypted passwords, insurance tab with numbers, amounts and insurance company contact info, tabs for the main mortgage amortization table and investment property amortization table, tabs with monthly estimates for each investment compounded… Read more »
It sounds like you have a very sophisticated system there!
So what is your net worth?
A number. 🙂
Oh come on!!
?
It’s unimportant!
FWIW, it’s a positive number if that counts for anything.
G’day Jimbo,
I have not used personal capital as it is not available in Australia. However, it comes across as though it includes net worth tracking capabilities… just wondering why the need for the spreadsheet?
Thanks, Matt.
The spreadsheet predates Personal Capital and I like keeping the continuity. It also contains a few other numbers (calculations) that I like knowing even though it’s not actionable – like total taxes I’ve paid, effective tax rate, etc.
We are in the same boat in our household. I keep a spreadsheet for keeping track of all of our account balances which I update at the end of each month. I use Personal Capital as well to get all of the balances in one place, as well as track net-worth there. I like the spreadsheet because it allows me to track budget and net-worth in one place. I found the budgeting function in Personal Capital doesn’t allow the level of granularity I want or need. Twice a month I copy and paste all of my expenses in, categorize them,… Read more »
Jim,
I wish I could see your spreadsheet (without the numbers of course) to see how you did it. I’d also love to see how you incorporated your budget in it. I’ve got a very detailed spreadsheet for my budget. But looking to see how I can create a spreadsheet to put in all my income and expenses in and compare it with budget to make adjustments.
Sounds great!
Pat
My spreadsheet isn’t very different than the one I share in the post, other than having more columns and obviously not being generic data. 🙂
I don’t incorporate a budget though. We no longer budget actively, it’s more of a retrospective “look back” at the previous month’s spending.