Need a quick snapshot of your finances? Let me show you how to create a Family Balance Sheet.
I’m a firm believer that finances must be organized and neat, and a Family Balance Sheet helps you keep track of your finances in one tidy spreadsheet. If it’s updated regularly, you will always know how much you OWE and how much you OWN.
You’ll know how much is in your checking and savings accounts and your retirement accounts. You’ll also know how much liabilities you have in the form of loans and mortgage(s).
Knowing all of these numbers doesn’t mean that there won’t be messiness with your money. Debts still need to be paid, cars will need new parts, homes will need to be repaired, and kids will need braces.
However, knowing your numbers will help you determine and make a plan for the messiness.
My mission is to help families increase their assets, reduce their liabilities, and grow their net worth.
The History of my Family Balance Sheet:
I created my very first Family Balance Sheet many years ago to give my husband a snapshot of our household and business finances.
My husband’s brain likes to see everything written down on one page, so I developed that first spreadsheet to list all of our accounts and all of our debts. Having everything on one page made our money discussions much easier.
My Excel spreadsheet listed our short-term and long-term account balances, our debts, and our short-term and long-term financial goals. It showed him what we OWE and what we OWN.
There was a time our spreadsheet reflected a lot of debt and not a lot of savings. But as we worked our way through our Debt Freedom Plan, we watched our debts fall and our net worth climb.
I STILL use our spreadsheet today. I refer to it weekly as I update loan and account balances, and still review it with my husband monthly or bi-monthly.
Create your own Family Balance Sheet:
I offer a spreadsheet free to email subscribers. If you’re interested, keep reading and you’ll see a sign-up box at the bottom of this post.
The spreadsheet is split between Assets and Liabilities:
Assets are resources that you OWN.
This section is broken into Short Term (Cash) Accounts, Long Term Accounts, and tangible assets/property values.
- Short-term accounts could be checking, cash savings accounts, health savings accounts, and emergency savings.
- Long-term accounts could be retirement accounts, savings for long-term purchases, like a home or your next vehicle, and college savings. There is a place to put a target balance for your retirement accounts, but if this is too overwhelming, enter your target balance for the year.
- Tangible Assets would be the VALUE of your home. In the past, I did not include space for this information, but after being in our home for almost 20 years, we have built up quite a bit of equity. (Value of your home if you were to sell it – 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? To find the value of our home, I looked at what comparable homes in my neighborhood recently sold for. You could also use a recent appraisal. Personally, I don’t include the value of vehicles or other non-appreciating assets in this category.
The Asset portion of the spreadsheet is column B – E:
- Column B = Name of Asset Account
- Column C = Current Balance
- Column D = Target Balance
- Column E = Difference between the target balance and the actual balance. The amount you need to save to get to your target.
Liabilities are what you OWE money on, such as car loans, student loans, credit card balances, and mortgage balances.
The Liabilities portion is F – L:
- Column F = Description of the liabilities/loans.
- Column G = Monthly payment
- Column H = Loan balance
- Column I = Equity = the value of your property minus any loan(s) on your property. To get a true equity calculation, be sure to put your property value (under assets) and its loan on the SAME ROW.
- Column J = Interest rate or the finance charge
- Column K = Statement date of the balances
Assets – Liabilities = Net Worth
Net worth is used often in regards to wealthy families, but honestly, it’s a formula everyone should embrace.
It’s time to change our mindset. There’s power in understanding and knowing what you OWN and what you OWE. How do your assets stack up against your liabilities/debts?
Personally, our goal is to OWN more than we OWE and to eventually OWE zero.
It might be scary to think about, but once you know these numbers, you then can come up with a plan to move forward.
Back in 2012/2013, we added new loans from a real estate purchase and spent the next 7 years paying off our non-mortgage debt. Our spreadsheet was very lopsided to the liabilities side. However, we put ourselves in that position and we were the only ones who could get us out of it.
Now that we have paid off ALL of our non-mortgage debts and only have a mortgage remaining, our assets are now on top and our net worth is on the rise.
Having more assets than liabilities gives you confidence about your money, and personally, our goal is to continue to grow our net worth through building our retirement savings and paying off our mortgage.
Meet, Discuss, Plan, Execute…Repeat
My husband and I meet to discuss our finances regularly. We will both go into the meeting with an agenda, but I bring the numbers to the table for us to analyze. How much or how little do we spend? Where did we over-spend? What’s on the horizon that we need to save for – car repair, household repair? What can we do to add some income? What can we do to reduce some spending? It is a time to hash out any differences or make some bold plans so that we can achieve a particular goal.
I look forward to these meetings even though they aren’t always fun to have. It is not always easy to look at the balances on both sides of the page, but if you don’t know your numbers, you’ll never be able to come up with strategies to move forward and improve your finances.
Get your own Family Balance Sheet spreadsheet: