How to Manage Your Personal Financial Records
Managing Your Wealth IS Managing Your Financial Records

Managing your WEALTH and DEBT is your responsibility and should not be put off too long. You owe it to yourself, your family, and your future.

I have used Lotus and Excel spreadsheets for many years to watch my "wealth" flow and ebb. If you don't know these tools, please use paper, but DO IT. You should always know and control your Income and Expenses regularly and actively manage your money.

Expand upon that monthly budget list or file you probably do keep. Add current values of assets like your home and properties on a separate column which is directly added to your wealth and similar to the Capital in business terms. Add your income from jobs and rentals monthly and multiply times 12 for the yearly calculations. Add balances for each investment or savings accounts, any pensions, savings bonds or CD's, IRA's, and income/profit you expect from businesses. This all becomes your PLUS or Total Assets.

Listing your expenses carefully can be the most difficult, but it is necessary. If you budget a regular amount of cash each paycheck, add that amount plus any payments you make. Whatever you charge on credit cards should be itemized as business, meals, vacations, utilities, clothing, school needs, medical, etc. so you have a handle on exactly what you have spent.

These expenses all become your MINUS or what to subtract from your Total Assets to find your true Net Worth. If the value is positive, you want to make grow. If it is negative, you certainly want to reduce it because you are definately in DEBT.

When you review these lists, you will see how you might manage better in future months and for future purchases. You can easily make a budget from your expense lists. It will become obvious that you can or cannot afford something when you look at what has become your Balance Sheet. Balance Sheets change at any period in time, but keeping and reviewing them monthly or quarterly is a good idea.

By the way, Quicken and other accounting software will produce these reports for you, if you enter the data correctly. Balance Sheets with Income and Expense transactions are the mainstay of the accounting industry. The trick will be in using the catagories correctly, especially in breaking down the credit card purchases when you enter the data.

Review Your Debts and Interest Rates You Are Paying

After recording each interest rate and realizing what finance charges you have been paying on each of your loans and credit cards, you can easily make several money saving decisions. You could, for instance, decide to use a special interest rate offer to transfer a balance from one credit card to another, or pay it off, and save yourself hundreds of dollars per month and thousands of dollars per year.

I (my wife actually) just did this exercise. She does it about once a year. She paid the balance on two of our credit cards and figures she saved us around $200 per month, by transferring one balance and paying off another that was under $1000. Each household and account needs to be evaluated separately and looked at together. She uses an Excel spreadsheet, but it's easy enough to use a pad of paper. She called another of our lenders and had our interest rate lowered by 10 percent.

If your credit is good or excellent, you might get approved for lower interest rates with a quick phone call to your lender. This effort may save you hundreds of dollars per month. Read how to fix your credit if you need to.

Keeping A Personal "Wealth Tracking Chart"

I keep a "Wealth Tracking Report" to review my balances from year to year. Over the years I can see how my personal wealth changed, including when I lost money in some of my investments after the tech bubble (ouch).

I take my quarterly balance sheets to make historical points and chart my progress in my investments and the value of my assets. Of course I add my debts and expenses (personal and business) to have a true look at my actual "wealth".