Strap yourselves in folks, because this is another long post about how we manage our money. At the start of the year, we were feeling frustrated because it felt like we were working really hard but never felt like we were “getting ahead” financially. To combat that, we started keeping track of our net worth. I will warn you in advance, this can be kind of depressing when you start off. If you are anything like us, and you have student debt, a mortgage, maybe a car payment, you will most likely have a negative net worth to start. However, as we began tracking our net worth, it quickly got less depressing. It feels good to see the amounts we owe decreasing each month as our net worth slowly inches toward a positive value. It makes us feel like we’re really making progress in a way that an empty bank account just doesn’t.
If you’re familiar with my other financial posts about budgeting and our student loan payment competition, then you already know how I keep track of our net worth: a Google spreadsheet. Here’s a link to a sample spreadsheet and a totally blank one with all of the formulas embedded that you can copy into your own Google Drive.
Net Worth Tracking Spreadsheet
We track our net worth on the last day of every month. This is convenient for us because by then, all of our payments for the month have left our bank accounts, but the new ones for the next month have not yet been deducted. It doesn’t really matter which day of the month you choose to track your net worth, as long as you do it the same day every month. This is helpful for comparison because you’re in the same financial “place” at that time every month (you car payment is paid, your rent is paid, etc).
Of course, the spreadsheet is divided into sections which I’ll outline for your below. I’ll also describe how I use each section, since some of them may not be intuitive.
- Cash Accounts – These are fairly liquid bank accounts, like your checking account or a general savings account. They will likely fluctuate the most from month to month. For these, all you do is enter the balance of each account on the day you’re tracking your net worth. Then you’re done. The spreadsheet will calculate the difference between one month and the next and list it for you under the “Change” column.
- Credit Cards – These are any credit accounts you have. Your Delta Skymiles card, your Victoria’s Secret Angels card, any and all credit cards you have should be included in this. Again, you enter the balance of your card into the spreadsheet on the day you’re tracking your net worth for the month. However, because these are debts (aka they count against your net worth) you need to enter them as negative numbers.
- Investments – These are long term savings accounts, especially those for retirement, or possibly stocks if you’re into that sort of thing. Basically, money that has been set aside for your future and is more difficult to get ahold of on any given day. You enter the balance of these accounts on the day you are tracking your net worth.
- Assets – This category includes things that you own that are worth money, like your house, your cars, or other big ticket items (hello Bones). Assessing the value of these is a little bit tricky, since you don’t really want to spend a ton of time on figuring them out each month. I reassess the value of our house and our cars every three months (January, April, July, and October). I use Zillow to estimate the value of our house. It’s a little lower than the assessed value of our house, but it’s good to play it safe and it does a fairly good job of following market fluctuations. I use Kelley Blue Book to estimate the value of our cars (and cry about their depreciating value) every three months as well. This requires knowing the make, model, and some details about your car, but once you look all of that up the first time, you’ll have it on hand for later. All you do for this category is enter the assessed value for each item.
- Cash on Hand – This is literally all of the cash (like actual paper money) we have in the house on the last day of the month. For us, it’s a fair amount because I bring home cash from the bar and I like to have a little on hand for emergencies like the veterinarian, for travel, or just general unexpected expenses. If you don’t deal in cash much at all you could probably eliminate the category altogether or just roll it into the Cash Accounts category.
- Student Loans – This is the amount we owe each borrower for our student loans as of the last day of the month. I just log into each account and copy each amount into the spreadsheet. Of course, they are negative since debt counts against your net worth. This part is cringe-worthy and totally sucks.
- Other Loans – This is the amount we owe on our mortgage, car loans, and any other long term loan (home equity, furniture, whatever). Again, I just log into each account, and copy each amount into the spreadsheet as a negative number. This part also makes you want to cry.
So once you fill out each of these categories the first time and you see your (likely negative) net worth at the bottom, you will probably want a beer or some wine or a nap. That is not the fun part. But, when you fill it out next month, all of the money you paid toward your student loans, your mortgage, and added to your savings will be tallied up for you at the bottom where it says “Change”. And whether your net worth moved toward positive numbers by $500 or $5000, you have proof of your progress. And that may motivate you to spend less and improve your net worth even MORE the next month. Or, if your net worth decreases, you might ask yourself why. Are you spending too much on things you want, but don’t need? Did you have a setback like a big car repair bill that you can try to be more prepared for next time? This method can help you figure out where your financial vices lie as well as show you your progress.
