October is a big month for me. I met my husband in October. We married in October. Family Balance Sheet, the website, turns 9 in October 2017, but Family Balance Sheet, the spreadsheet, turns 14.
Back in October 2003, I left a corporate career as a department store buyer with a nice reliable paycheck and benefits–including health insurance –to join my husband in the land of self-employment.
Going from a consistent paycheck to one that varied month to month was an adjustment and required a lot of communication between me and my husband. It was tricky at first. I could talk all day about personal finance and money-saving strategies, but my husband, while very responsible with money, just doesn’t feel the same way.
To keep the communication flowing, I created my very first Balance Sheet to give my husband a snapshot of our household and business finances. The spreadsheet listed our short-term and long-term account balances, our debts, and our short-term and long-term financial goals.
I STILL use our spreadsheet today. I refer to it weekly as I update loan and account balances, and review it with my husband monthly. In fact, our family’s balance sheet now includes 10 additional spreadsheets that I have created over the years. I’m a bit of a spreadsheet junkie. Love me some Excel!
The Updated Family Balance Sheet:
I recently made a few updates to my Excel balance sheet and I wanted to share them with you.
What Stayed the Same:
The Family Balance Sheet is still the one page spreadsheet to list ALL of your assets/accounts on the left side and your liabilities/debts on the right side–just like the picture above.
When you get to a certain age…ahem, cough, cough–mid-life…and it seems like all you do is save, scrimp, and pinch pennies, exhaustion can set in. At times over the years, my husband thought our focus was too heavy on the cutting and the reducing of expenses, and and not enough on the building and the increasing of income. He felt like we were living a life of “lack” with my constant chatter about money.
I don’t want him to feel that way. We are working towards some pretty big financial goals and we’ve hit quite a few already. Our balance sheet is starting to reflect all of the hard work we have done over the last 5 years to reduce out non-mortgage and business debts, so I added a few calculations that were missing in the past.
I added a Net Worth calculation.
Assets – Liabilities = Net Worth. The original spreadsheet tallied up the assets on one side and the liabilities/debts on the other side, but didn’t include this calculation. I honestly don’t remember why I didn’t include it 14 years ago, but the number might have been a little too…negative…for my comfort level. And at the time, we were focused more on our
transition…survival from a corporate paycheck to a self-employed lifestyle.
I think many people are afraid of net worth–apparently, I was, or I would have included it initially.
Net worth is used often in regards to wealthy families, but honestly, it’s a formula everyone should embrace, so it’s time to change our mindset.
I feel strongly that everyone should understand how their assets stack up against their liabilities/debts. There’s security in knowing we own less than we owe.
I added space for tangible property, such as your home residence or any rental property.
In the past, I did not include space for this information, but after being in our home for 16 years, we have built up quite a bit of equity. (Value of your home – outstanding debt on your home = Equity)
When determining your property value, consider what price you could sell your home for today–not the price that you’d like to sell it for. What is a reasonable price you believe you could get for your home?
Personally, we are focused on our financial goals right now, and the equity (along with our savings rate and debt reduction) is moving our Net Worth in the right direction—UP!
I’m proud of the equity we built up in our home and the improvements it made to our balance sheet. Granted, we’ve been here 16 years, but much of this equity was the by product of specific decisions we made:
- We bought a smaller home.
- This house was less than what the bank said we could afford.
- We refinanced multiple times during the hey day of low interest rates at various banks and credit unions. Many institutions didn’t even charge us fees to move our loans.
If you are new home owner with very little equity, don’t worry, you’ll see the number rise as you make your payments, but it will take time. You can decide if you’d like to include it.
One note of caution, I don’t advocate for using all of your equity in the form of a home equity loan to purchase a lifestyle. That kinda negates any net worth your equity offers.
You’ll find 2 net worth calculations: with and without the property value.
Our goal: Increase Net Worth
Today, in 2017, we’re mid-lifers….scary thought…and we’re transitioning again. What do the next 10-15 years have in store for my family? We’re starting to really talk about these years and beyond.
We have been focused on our debt freedom plan for the last 5 years and while we’ve made A LOT of financial mistakes in the past, we have also made a lot of great decisions and improvements over the years. Our goals are to continue to focus on increasing our assets, reducing our liabilities, and growing our wealth/net worth.
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