Earlier this week I shared my Net Worth Tracking sheet with all of you. It’s definitely my favorite spreadsheet, and the one I most look forward to updating every month.
In fact, recently I’ve felt like I don’t even want to budget at all.
I log into my accounts, grab the totals, throw them all in the budget and cry tears of either joy or sorrow, depending on the results. Once I’ve updated the net worth, I really don’t feel like going back and categorizing every single transaction in my budget.
I’ve already looked at all my accounts and compared them to last month. Shouldn’t that be enough?
I wish.
I Need to Review Transactions Every Month
I would love to just update my net worth every month and move on with my life. The problem is, my Net Worth Tracking isn’t going to tell me when I have financial issues that need to be addressed.
When updating my budget last month, I found two errors in my accounts. In one case, a credit card changed their address so my automatic payment was sent to the wrong place. In another, one of my student loans was messed up and I had a horrible customer service experience.
I’m not sure if either of these issues would have been caught with a simple net worth update. Doing a detailed review of all my transactions is the best way to catch these errors, and I can’t miss out on that opportunity.
In addition, if you don’t track your spending in a budget, then you don’t know what to do if you need to make changes. Maybe your net worth tracking is showing you are losing net worth every month. Without a budget, you won’t know exactly where your money is going, and can’t identify opportunities for savings.
I’m sticking with the budget. It’s a lot of work, but it’s worth it.
How Do You Manage Your Finances?
So we know I’m a detail freak and have a compulsive need to review every transaction in my budget. That doesn’t necessarily mean that’s the right thing for you. Personal finance is personal, so I want to know what my readers do. If you’d like, take a few seconds to let me know what you do. If you want to expand on your method of madness, leave a comment below.
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Friday Links
How to Bootstrap a Business – Want to start a business on an extremely tight budget? Paula can teach you how. Just remember; most things worth doing aren’t easy.
The 10 Best Things I Ever Bought – Len might be the best writer I’ve ever encountered in the personal finance world, so if you haven’t seen his site you need to check it out. He lists his ten best purchases. My ten best purchases would have to be 10 different occasions of buying St. Louis Style Pizza. Mmmmmmmmmmmm.
How to Become a Billionaire Fast – Mark at Buy Like Buffett tells the world a really easy way to become a billionaire. This will probably be one of the most surprising articles you’ve ever read.
Kevin McKee is an entrepreneur, IT guru, and personal finance leader. In addition to his writing, Kevin is the head of IT at Buildingstars, Co-Founder of Padmission, and organizer of Laravel STL. He is also the creator of www.contributetoopensource.com. When he’s not working, Kevin enjoys podcasting about movies and spending time with his wife and four children.
I have a budget, but I don’t make sure I stick to it every month. It’s mostly for me to figure out how much I can save – which then tells me how much my net worth should be increasing. If I don’t hit my net worth goal I can always go check on why.
Can’t have one without the other really….if you want a clearer picture.
budget = profit and loss/ income statement
Net worth calc = balance sheet.
TMG
I use Mint.com for budget tracking, and really let it do all the heavy lifting for me. Now that I’ve been using it for a while, it has a pretty good sense of how any of my transactions should be tagged, so really all I have to do is log in every few days and make sure everything’s as it should be. It’s useful for keeping my spending on track, and it can create handy graphs and charts about my spending habits, and tracks my net worth for me. As far as I’m concerned, if my net worth keeps going up, that’s all I need to know!
I use a form of a budget and occasionally look at my net worth. Net worth is becoming less of an indicator because of the stock market volatility. I don’t keep a real tight budget because, I rung every ounce of fat out of my expenses.
I only look at my net worth on a six month basis, some of them annually only cos they are longer term investments and as long as i dont see too much of change – i’m pretty comfortable. So i focus mostly on keeping to the monthly budgets to ensure the discipline stays strong…
I actually use a budget spreadsheet created by another PF blogger – Fabulously Broke over at www.fabulouslybroke.com I LOVE her spreadsheet – TONS of detail, excellent color-coding and organization, and automatic networth calculations. My financial situation is a little atypical, so I’ve made some modifications to her spreadsheet, but overall it has been the best of all the different ways I’ve tried to budget and expense track.
Thanks for the links Kevin. I must say that I dont really manage my finances, I need to learn some more about this topic… have agreat week 🙂
Honestly Kevin, I really have hard time with tracking my money, I have a spreadsheet I suppose to fill but somehow I find myself just thinking about it and not really doing it, I like you to give me some kind of creative advise about how to keep in touch with my money.
Net Worth Tracking is only going to tell you where you stand financially, dont expect it to bail you out of troubles (unless you have some savings)
Gotta use the budget!!! but in the correct way: The budget is supposed to forecast your spending, not reflect it. We do bi-weekly budget (each pay period) where we account for all regular spending (groceries, blow, dinner, etc..) and also throw in the bills that are due within that time period. We simply enter purchases and transactions into the budget so we know how much is left. We use an app called “Budget” that syncs on my wife’s phone as well so we both know if we can or cant go to the movies this weekend (rather than if we shouldn’t have).
I’ve got no debt and not much income and I’m just TOO F-ING LAZY to both tracking my net worth (not much) and keeping a budget (spending less than I earn anyway). What I DO, however, is checking each and every transaction, to avoid fraud, and checking how much is left in my bank account at least once per week to know where I’m at.
However, if I manage to boost my income (hopefully soon), I fear it will get a little more complicated than this.
Thanks for the referring link! I admit, I tend to track Net Worth and ignore the budget, which is ironic considering how much time I spend blogging about personal finance. It’s just that I simplified things by living drastically below my means so that I don’t “have” to budget … but, of course, that’s not the solution. Has the grocery store triple-charged me for the same item? Has a server inflated the tip I left him by an extra $25? Who knows? Not me, cuz I’m not checking my receipts against my statements.
So I made a deal with my boyfriend: I’ll spend one evening a week budgeting while he cleans the bathroom, mops the floor and generally does all that other gross home “deep-cleaning” stuff. This week should be the first week of this experiment.