Make Money Jot

Monday Money Management Tips 

Ah, a good Monday morning!  What better way to start the day than to think about better money management tips.  Every Monday, I write about money management tips and today’s tip is about focus.  Last Friday, I continued with the series “The Philosophy of Making Money” and the first two points are: 1. Determine what you want and desire and 2. Learn how to measure the accomplishment of your want and desire.

Today’s money management tip is going to concentrate on measuring your want and desire.  Since, I do not know, specifically, what your want and desire is; I am going to assume you want to improve your net worth.  With that in mind, I am going to show you a simple excel spreadsheet that you can create to measure your net worth.

A net worth spreadsheet was one of the first measurement devices that I started to use in order to keep track of where I was on my goals.  It is simple, but important and powerful.  It only takes a little bit of time, but the simple act of measuring your net worth has a residual effect on helping you reach your goals.

Creating a Net Worth Spreadsheet:

1. Lets you know the exact, current dollar amount.
2. Lets you know how far you are from your goal.
3. Keeps you focused on your goal.

So let’s get started.  First, we need to know the equation for measuring your net worth:

Assets – Debts = Net Worth

Your assets, what money you have; minus your debts, what money you owe to someone else, equals your net worth, the actual value of your money.

1. Create tables in an excel spreadsheet for all of your assets: the money you have in your bank accounts, the money you have in your retirement accounts, the equity you have in your home; you can even include the value of your car, but, remember, a car always costs and decreases in value, unlike a house.

2. Create tables for all of you debts: the money you owe on credit cards, how much is left on your mortgage, and how much is left on your student loan.  Any debts that you have should be listed here.

3. The final column is the total, the net worth, which we will create a function to calculate that for us.

4. You should highlight columns B3 through K3 and set the type as currency, so when you enter the amount, it will auto format the numbers as money.

5. We can create the function to calculate the Net Worth for us.
 A. Hightlight K3.
 B. On the top, select “Insert > Function.”
 C. Select, “Sum” and enter the values “B3:J3”

6. All you need to do is plug in the value of your assets and debts.  Remember that your debts are negative (-) numbers!

The value of this spreadsheet is when you complete this on a regular basis like once a week.  I, personally, keep track of my net worth every Sunday.  I add a new line with the current date and plug in the numbers and see how my spending versus my earning changes my net worth over time.  This simple act causes me to think about what I spend, because I see when my net worth decreases or increases.

You can pick up more powerful applications to complete this for you (Microsoft Money, Quicken, etc) or even create a more powerful spreadsheet, but the main point is to MEASURE your net worth on a REGULAR BASIS.

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