Getting Balanced - Tracking Your Net Worth

Its often difficult for people to track their economic progress. There is, generally a lot going on in one’s economic life. People have auto loans, credit card debt, student loans, home mortgage debt, stock accounts, retirement accounts, cash in savings and often other types of investments that may be a bit less mainstream. It is tricky to keep a mental picture of how things are shaping up in your economic life.

For those without accounting backgrounds (or those with accounting backgrounds for that matter), the term “Balance Sheet” may cause a shudder of terror, boredom, or some mix of the two. I think the term carries a lot of negative connotations, but its really a very simple and excellent tool to take a quick reading of your economic health.

I’ve found that having a basic balance sheet in a spreadsheet on my computer is an excellent tool to keep me motivated in moving forward financially. It allows me to quickly document all my major assets and liabilities, quickly scan them over time, and see, in a very concrete way, whether my net worth is increasing or decreasing. I’ve posted a very simple example below in the form of a table. You’ll need to tweak it to your own situation as you may have other assets and liabilities on the list. Copy the table into Excel or OpenOffice, spend 30 minutes filling in each of the little boxes for January, save the file, and forget about it until next month. Seriously, you can do it in 30 minutes…I promise. You can track it every month or every quarter, whichever you prefer, but be rigorous about it. It will be a great tool to you going forward to keep you motivated in maintaining your economic health!