If you’re a busy person, or if you’re using more than one financial product, keeping track of your money can be challenging. But it’s important to keep track of your hard-earned dough so you can identify where your money is going if you’re achieving your net-worth goals, and if something falls off the rails, you can take immediate action to rectify the situation.
Experts recommend spending no more than 10 minutes a week monitoring your personal finances. If you’re an active trader, however, you’ll spend more time at it. One of the best ways to track your monetary progress is through a net worth spreadsheet. For all those non-technical, non-finance folks out there, there’s no need to get freaked out. Start by marking the date at the top of your spreadsheet.
Then, identify all your assets — things you own. Write down the name of the institution where your accounts are held, followed by the type of account, then how much money is in the account.
To get a handle on how many accounts you have (since many Canadians have more than one bank account, investment account, loan, credit card, and ATM card) look at all the statements that come in the mail or, better yet, view your account online and save a tree.
Once you’ve listed your assets, total them up. So, for example you might have a ScotiaBank RRSP with $5,000 and an ING Savings account with $2,000 for a total of $7,000 in assets.
Do the same with your liabilities — things you owe money on. Identify where your account is held, the type of liability it is and how much you owe.
So, for example, you might have an RBC car loan with $10,000 owing and a Canada Student Loan with $15,000 owing for a total of $25,000 in liabilities.
Once you’ve listed assets and liabilities, subtract your liabilities from your assets and voila — that’s your bottom line.
Ultimately, you’ll want to grow your net worth through a combination of asset growth and debt reduction.
One of the best ways to do this is by tracking where you are now and setting realistic net worth goals for the future.