Set Up Your Personal Balance Sheet

Financial goals are an important part of our life. Whether saving for future purchases like vacations, or tracking our overall net worth as we work toward financial freedom, I use a personal balance sheet to track our progress.

A balance sheet is: “A statement of financial condition at a given date.” It’s a snapshot that shows you exactly where you are at any given moment. It’s a common term in corporate accounting, but is just as relevant for a person or a family.

The balance sheet is broken into two categories: assets and debts (or “liabilities” in the corporate world). The sum off all of your assets minus all of your debts is your net worth. Tracking net worth is the best way to measure financial progress.

When I first started tracking my net worth, it was deep in the red. Acknowledging my situation was the first step to improving my position. Then, once I started budgeting and tracking my spending, I could project into the future to set goals. And more importantly, these tools empowered me to get in control of my finances.

In our personal balance sheet I keep track of:

  • Cash – Cash on hand (COH) and what is non-investment accounts (such as checking, savings, and emergency fund).
  • Investments – Current value of gold and silver, cash in our brokerage accounts and current value of stocks (Real Estate would go here as well, though we don’t own any).
  • Credit Cards – Current balance of all credit cards.
  • Loans – We don’t have any loans, but I once had student loans and a car loan (negative Real Estate equity would also apply if a mortgage is larger than the value of a home)

I use Mint to keep track of electronic accounts, but I still prefer a spreadsheet for the big picture. You can download my Personal Balance Sheet template (Excel Version, or Google Spreadsheet) to get you started on yours. The Google Spreadsheet version has the added feature of auto-loading stock prices (helpful if you own equities).

To use the template:

Download the Excel Version (save it to your hard drive), or open the Google Docs version and make a copy by clicking “File>Make a copy” (you need a Google account for this to store the document in your Google Drive: www.google.com/drive.)

Set up your Personal Balance Sheet:

  1. Navigate through the various tabs at the bottom of the spreadsheet: Balance Sheet, Real Estate, Precious Metals, Investment Account, Log, and Cash Flow.
  2. Note cells with calculations used to add (wherever there is a total), and to pull values from other tabs into the main Balance Sheet. To see if a cell is a calculation, click in the cell and look at the value in the function bar at the top. If it starts with an equals sign (“=”), it is a calculation and should be left alone.
  3. Add your financials to the sheet and delete any data that isn’t relevant. If you need to add more cells, it will be helpful to understand how the SUM function works (see this video). Be sure to check all calculations after adding or removing rows to make sure they are calculating properly.
  4. Track your Net Worth each month in the log. It calculates how much you are improving and projects your Net Worth going forward based on the most recent month’s improvement (or you can manually enter a value if you have budgeted future savings in the Cash Flow tab or in Mint).

What challenges do you have keeping track of your finances?