Net Worth Spreadsheet

Net Worth Spreadsheet


Your personal balance sheet is at least as important as your personal budget if not more important. Your personal budget tells you how you are doing paycheck to paycheck. It is like quizzes. You can ace one and bomb on another one and you expect one every couple of weeks or each month. Your balance sheet is the report card. It adds up all the totals and lets you know if you have passed or failed personal finances. However it is very clear that most folks do not know much about a balance sheet. We will try to answer some of the most basic questions such as:

What is a personal balance sheet? How do I fill out a personal balance sheet? What does a personal balance sheet tell me? What should I have for balance sheet goals?



The Net Worth Spreadsheet

You can download, fill in and print this Excel 2003 document or download, print and fill in this budget speadsheet. It opens in another window so you can fill it in and still access the coaching on this page.

What is a personal balance sheet?

This spreadsheet is a financial tool that helps you track your assets, liabilities and the balance between the two. The bottom line for this tool is that it will tell you what you have if you had to sell everything. Would you have money left over or would you still be in debt?

What you Own: Assets   What you Owe: Liabilities  
       
CASH:   BILLS: Balances on  
       
Cash on hand   Credit Cards  
    Court Judgments  
Savings accounts   Lines of Credit  
Money-market Funds      
Cash value of life insurance      
Other cash and cash equivalents      
    LOANS: Principal remaining  
SECURITIES:      
    Automobile Loan  
Stocks   Automobile lease (total left on lease)  
CDs, GICs, Bonds   Student Loans  
Mutual Funds   Home Improvement Loans  
Government Securities      
Other Investments      
       
REAL ESTATE:   MORTGAGES: Principal remaining  
       
Personal Residence   Personal Residence  
Rental or Vacation Property   second or third on residence  
Other Properties   Rental or Vacation Properties  
    Other  
LONG TERM ASSETS      
       
Life Insurance      
IRAs, RSPs, Superannuation   OTHER DEBTS:  
Annuities      
Company Pension Plan      
Other      
       
PERSONAL PROPERTY:      
       
Automobiles      
Household furnishing (resale value)      
Clothing and Jewelry      
Art and Collectibles      
Other      
       
       
  ********************************   *********************************
TOTALS:      
  ********************************   **********************************
TOTAL ASSETS:      
MINUS TOTAL LIABILITIES:      
EQUALS NET WORTH ********************************    
POSITIVE      
or NEGATIVE      
  *********************************    
       
       
       


How do I fill out a personal balance sheet?

This is a very simple tool. You fill in the blanks and then all you need to be able to do is add and subtract. That is as complicated as the math gets. On the left side you fill in your assets.

  • For cash on hand you enter what you have in cash and what is in your checking account .
  • For savings you enter your bank balances.
  • If you own money market funds or life insurance policies that have a cash equity value, enter the current value.
  • Do the same for securities below if you have any stocks, mutual funds or investments that have a marketable value. By marketable I mean the amount of money you would get if you sold it today. 
  • So when you enter the value of your real estate you need to enter what you would expect to realize if you sold your property today. Don’t forget to subtract real estate agent fees and other selling costs from the total value.
  • For your long term assets you should be getting a monthly or at least an annual report on the value have in these assets. Enter the most recent amount and you can indulge yourself by projecting your year to date contributions to these sorts of plans.
  • Be careful when entering amounts for personal assets that they also reflect the cash value of what you have if you had to sell it quickly. Your brand new automobile is worth about 30% less than what you paid for it the minute you drive it off of the lot. A leased car cannot be listed as an asset as you do not own any part of that car. Many collectibles are not worth book value if you have to sell them in a hurry. You will likely get wholesale value if you have to sell them to a shop that would then resell them. Used furniture is usually worth 30% of retail price if sold through a classified listing.

For liabilities the challenge is to face up to what you really owe and not fudge the numbers. One perspective to put this in is what would you have to pay to settle this debt if you won the big lottery tomorrow.

  • For balances on credit cards and Canadian secured Mastercard credit cards or lines of credit you get a statement every month that will clearly identify the balance of what you still owe.
  • The liability of a court judgment is just that. If you owe $500 a month for 10 years the liability is $60,000. It is the total amount you will pay to satisfy that judgment. If you have paid 3 years of the 10 in this example you will still have a liability of $42,000. 
  • For personal loans you enter the amount that you still owe at the time you are filling out the balance sheet. For a car lease, enter the total amount left to pay on the lease until its term is expired. 
  • For mortgages enter the amount that is left to pay on the mortgage.

The next step is to do just what it says on the spreadsheet. Add up the total of the Assets and subtract the total of the Liabilities to get your PERSONAL NET WORTH.

What does a personal balance sheet tell me?



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What should I have for balance sheet goals?

The simplest statement of balance sheet goals is that you should have a positive and increasing net worth. This is about the most powerful financial tool that you can build. You save costs on your budget because you are borrowing only what is necessary. Your debt is “Good Debt” which means you save or make more money with this borrowed money than it costs you in interest. You save on borrowing costs because you get the best borrowing rates. You are not a risk of default so borrowers do not have to factor the cost of collection of their debt. You get the best investing opportunities. You get the best savings rates because you invest long term. To get to this point you have developed some good business instincts that allow you to sort out good investments from the charlatans. Birds of a feather flock together so you will find you will exchange information with like minded people and you will hear of other quality investment opportunities that will help your net worth grow. The ultimate goal is to build enough positive net worth that you will have enough investment to provide cash flow in your retirement. And you cash needs will be reduced because you will own your home which accounts for about 33% of your budget needs while you are building your net worth to retirement.

Quick Net Worth Spreadsheet


Your personal balance sheet is at least as important as your personal budget if not more important. Your personal budget tells you how you are doing paycheck to paycheck. It is like quizzes. You can ace one and bomb on another one and you expect one every couple of weeks or each month. Your balance sheet is the report card. It adds up all the totals and lets you know if you have passed or failed personal finances. However it is very clear that most folks do not know much about a balance sheet.


COACHING

Here are some relevant chapters from the book Think Your Money that may help coach you on how to think about your balance sheet.

The first step in building a strong balance sheet is to start saving.

You need to learn how to manage debt.

Once you build your savings you can try more complicated ways of investing to make your net worth grow more quickly.

Questions? Financial Therapist Contact Ask us - We will reply and if it is a really good one we will publish it and its answer in our weekly blog entry. If a lot of folks have the same question we will build an FAQ url or urls on the site.

Back to: Personal Finance Budgeting