Mo Money's Building Wealth Blog

Happy New Year!  Let’s hope that the new year brings good health and much prosperity.

Speaking of prosperity, one thing that I like to do at the start of every new year is to take the pulse on my financials – specifically to see where I am year over year.  Why do this?  Well, I hope to be at or above where I was a year ago and this allows me to do a health check.  Also, it helps me to better plan for the coming year with respect to budgeting.  If my net worth has grown quite a bit more than expected, then I can choose to allocate more to discretionary spending.  If I am down, or in the red as they say, then I can choose to tighten my belt until things approve.  To be honest I like to do a health check multiple times a year but then lock in the final numbers around the first of the year.  This  gives me a nice running history of my net worth.

Here’s how I like to do it.  I set up an Excel spreadsheet for this, but if you aren’t comfortable with Excel then a sheet of paper or spiral notebook would work fine.  On my sheet I set up a group of rows as my Assets (what I own) and another group as my Liabilities (what I owe).  The difference between the two is my Net Worth.  I use a column to represents a distinct year, so over time I can track my net worth year over year and easily see if I am doing better or worse.

Here is an example of such a tracking sheet.

The information that I entered in this example is pretty self explanatory and you can certainly add/delete/customize the rows for your own personal situation. What I do typically, after locking in the new year numbers, is to add a next column for the current year and then I update it periodically throughout the year just to be certain that I don’t have to adjust my budget in any way.

Hopefully you find this little exercise valuable and helpful when performing your own financial health checks.