Johnny and I are big proponents of keeping an itemized budget — in other words, tracking every cent. There’s no better way to hold ourselves accountable than having to answer to every single purchase… even that delicious Value Size Vanilla Frosty. We have to spend purposefully because our budget forces us to be aware of where we are for the month.
For instance, we’re only halfway through October, but, due to some poor planning on my part, I’ve already spent all but $20 of our grocery budget. Since I’m aware of this, I’m going to avoid buying more groceries and get creative with our meals in order to avoid going over budget. Oatmeal with Vienna Sausages, anyone? That’s disgusting, I’m sorry. The point is, I’m sure I’d easily spend much more on our grocery expenses this month if I didn’t know where we stood. So itemized budgeting helps with the day-to-day.
However, itemized budgeting isn’t great for keeping a big-picture perspective. We may be tracking our spending, but how do we know we’re progressing? Well, that’s where tracking your net worth comes in handy. At the beginning of every month (and typically on the same day), we calculate our net worth. We keep it in a handy little Google Doc spreadsheet and keep track of our progress over time. One of our New Year’s resolutions was to add $25k to savings, so each month we can see how well we’re doing with that goal. So what does our net worth track? Here are the deets:
- Cash Accounts: For us this includes Ally, Chase, PayPal, and Simple. It’s the total of our liquid cash. Whenever I hear “liquid cash,” I like to imagine turning on a squeaky spigot that pours out coins. That’s what it means, right?
- Credit: Although we pay our credit cards off in full each month, sometimes there’s a balance on one of our cards at the end of a month, so we deduct this from our net worth. Tracking it this way also serves a good reminder to pay off any outstanding balances.
- Investments: Our current investments include my 403b, a Roth IRA, and other random investments.
- Other Assets: Obviously, we don’t own a home, but if we did, we could include that right here (minus the balance on the mortgage, of course). Rather, here we include the current value of our lone car and scooter. Every six months or so, we check our vehicle values on KBB and simultaneously revise the numbers and cry about their depreciation.
Here’s what our spreadsheet looks like (with all of the numbers completely changed — we try to keep those digits on the DL):
We add all of the balances of our accounts together to come to that month’s grand total. We also calculate the change from the month prior, which is the equivalent of making our net worth swallow a truth serum. Are you worth more or less? Did you save or did you lose? How do you compare from six months ago? Because we’re already tracking our day-to-day expenses, we have a decent idea of where things will shake out. But some months, we don’t track perfectly (shhh, don’t tell Dave Ramsey!). Other months, we bring in a little extra here or there (next month I get paid three times instead of two! [insert nerdy, responsible adult excitement here]). So this little spreadsheet helps us remember the big picture.
Are you tracking your net worth? How does your system differ from ours? Should we include our cat’s potential asset value should she ever fulfill her destiny as a YouTube star?