Why everyone needs a balance sheet

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The simple personal finance definition of this would be: Assets – Liabilities = Net Worth

It probably wouldn’t take you more than an hour to get it set up in an excel spreadsheet, and even less to update it every year. Click here to download my personal balance sheet (Excel).

A personal [tag]balance sheet[/tag] is a great way to get a quick check-up on your finances.

As in just about anything, you are either moving forward, or you are going backwards. The same holds true to your financial situation. If you are increasing your assets or minimizing debts your net worth should be growing. If it is getting smaller, then clearly you need to make some changes.

I update mine semi-annually, because I get encouraged by seeing the progress. Even if your situation is not very encouraging, it is always beneficial to be informed.

I also use mine to keep track of my account logins and basically as a designated location for my wife to have all of our financial details if I were leave earth earlier than expected.

My people are destroyed for lack of knowledge… Hos 4:6

The mind of the prudent acquires knowledge, and the ear of the wise seeks knowledge. pro 18:15

{ 3 comments… read them below or add one }

Factory3 August 6, 2007 at 3:12 pm: You can do this also @ this website and access it anywhere:

http://www.networthiq.com/
Carlos Moreno November 14, 2008 at 2:13 pm: I really admire what you have done in this site , so much good advice, thank you so much, im in a mountain of student loan and creditcard debt, i am so frustrated , thanks for the tips im going to give budgeting all my effort. and maybe ill have a positive networth soon!!
bob November 15, 2008 at 11:17 am: Carlos – I know the feeling. You will have that positive net worth! Just don’t give up and keep going!