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The Financial Snapshot

Written by Guest Contributor - 14 Comments

This is a guest post by J. Money of Budgets are Sexy. If you like what you see here, please consider subscribing to his RSS feed.

The financial snapshot. It’s a new trend, baby! Okay, maybe not… At least not yet… But if it were, I guarantee that people would be in a MUCH better shape these days. If you know where your money’s coming from and going to, you’re going to make much smarter financial decisions.

So what, exactly, is this “Financial Snapshot“? According to The Dictionary of J.:

Financial Snapshot [fi-nan-shuhl snap-shot] noun: A spreadsheet that lists all of your debts, all of your savings, your net worth, and most importantly your budget – all in one spot!

A real-life snapshot

Check out my own financial snapshot. It gets updated a couple of times a month, and makes my life a helluva lot easier. You’re more than welcome to download the blank template (xls) and play around with it. I like using Google Docs for accessibility, but you can use pretty much any program as long as stick with it.

Now, for the sake of keeping this short (and not boring you to death), I’ve listed a few easy steps below just to get you started. Whether or not you keep reading, just remember that the main point here is to have a clear understanding of your financial situation. That’s it! Once you’ve gotten a firm grasp on that, it’s all downhill, my friend.

  1. Get your mind right. Let’s face it, if you’re not in the mood to talk finance and get all budgety, it’s just not gonna happen. We’re all human, and if we don’t wanna do something, then we usually don’t do it. Unfortunately, organizing your finances is usually one of those things you don’t wanna do. But if you set aside little bits of time, and update thing when the mood is right, you’ll find that it goes much more smoothly.
  2. Start with the quick and easy stuff. If you take a look at the template, you’ll see there’s room for all sorts of numbers to fill out (don’t worry, once you do it the first time, it gets much quicker). The easiest place to start (in my opinion) is with your credit card balances and income. You can easily get this info by logging into your accounts and copying/pasting these numbers over.
  3. Tackle your “net worth.” Your net worth is basically all of your assets minus all of your liabilities. So things like savings, 401(k) accounts, Roth IRAs, stocks, bonds, etc. all get recorded in the assets department. Then we put things like credit card debt, loans, etc. in the liability section. Gather it all up and record the info in the right spots to find out your net worth. And remember, there are no right or wrong answers here – just the facts.
  4. Create a simple budget. This is my favorite part. Go back a month or two and track down where all your money went. Look at your checking accounts, savings accounts, credit cards, etc. Add everything up by category (e.g., mortgage, cable TV, food, etc.), and then divide by the number of months you’ve tracked. This will give you a solid estimate of how much you’re spending in each category on a monthly basis.

Now, plop these numbers into your spreadsheet, and voíla… You’ve got yourself a budget! I always advise keeping the numbers intact for the first month (or pay period, or whatever length you want to budget for) so that you can get used to balancing it. But after a month or so, start chopping away at the numbers and challenge yourself to spend even less! You’ll be amazed at what you can accomplish once you have a game plan in action.

So that’s it my friends – the “Financial Snapshot” as your boy J. Money sees it. As with everything in life, it’ll take a bit of work to get things rolling, but… If you stay on top of things and keep your head up, you’ll have no else where to go than up!

Ya just gotta start baby…

Published on June 5th, 2009
Modified on August 31st, 2009 - 14 Comments
Filed under: Planning

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14 Responses to “The Financial Snapshot”

  1. 1
    Kevin@OutOfYourRut Says:

    A seriously valuable article! We all need a budget, but a lot of us are too afraid to see financial reality staring back at us from a sheet of paper or computer screen.

    Good idea framing the recommendation from the psychological/emotional angle–that’s what it’s truly about. We tend to think of budgets as being about money but nothing could be further from the truth. The true state of our finances can find us looking into some deep crevices in our minds! “Where lies your treasure, there too lies your heart.”(Mt. 6:19)–truest words ever spoken!

  2. 2
    AustinG Says:

    Great read. I have to say that Mint.com will do exactly what your spreadsheet does as far as calculating your net worth – you can plug in your mortgage, banks, credit cards, 401k, etc and it will pull all the info from your accounts for you and give you an up to the minute picture of your net worth.

    Really good article here.

  3. 3
    MikeS Says:

    Nice article. I created my own spreadsheet 11 years ago. It started out as simply a reminder of when certain bills were due. Now, it has all my monthly expenses (going back 11 years) and all my savings accounts. It has evolved over that time as I’ve wanted to keep track of different things. It is much more complex now than it was 11 years ago.

  4. 4
    Jeff@StretchyDollar Says:

    I love this spreadsheet – it saved me! I like how you’ve broken down everything else about it, too.

  5. 5
    J. Money Says:

    Thanks guys, glad you’re enjoying the article :)

    @AustinG – I’ll agree that Mint works great as well. While I prefer to stick to more manual stuff (it helps “stick” better with me and forces me to look at everything), it’s important to find a way that works best for YOU, as an individual. Once you got that gameplan in check, hold on tight and keep rockin’ it out!

  6. 6
    Tom Says:

    Great post!

    I have used Quicken to calculate and track a lot of this information including net worth and budget. However, I think there are advantages to going to the spreadsheet occasionally. I feel “what if” scenarios are much easier in the spreadsheet. It is easier to see how things look after paying off specific debts, for instance. Or factor in multiple purchases or expenditures in the future.

    You can generally do that with Quicken (and I assume with Mint as well), but the spreadsheet gives some freedom about moving things around easier (but of course some freedom to calculate it wrong as well). Like J. Money said, whatever works best for the individual.

  7. 7
    Rosa Says:

    I keep separate spreadsheets – one with our “actual worth” and one that counts all debts but ignores paper values – where would we be situated if the housing market or stock market completely crashed, in terms of cash flow & net worth.

    This year was the year we hit black ink even if our house became worthless. That is a very nice feeling. I don’t think it will ever happen that we’d be in the black if the house and the market lost all value, because that would be a pretty unbalanced portfolio – but it’s still nice to see the “real” vs. unrealized assets.

  8. 8
    Laura @ move to portugal Says:

    Great spreadsheet J! A bit simpler than mine, which I like. I might have to tweak mine a little :)

  9. 9
    Ellen Says:

    I used to do my budgeting on an Excel spreadsheet and I’d enter expenses there a few times a week. I was rather diligent for the first month but after that, recording the receipts and remembering how much I paid for items a day or two after just became such a hassle.

    So I got myself an iPhone app called WalletWhiz which allows me to track my expenses as I spend them. I hope it would really help me be disciplined about my spending habits and help me keep track of my personal savings goal. Thanks for sharing your own tips on budgeting!

  10. 10
    K. Says:

    Where can I get a copy of this Dictionary of J?

  11. 11
    CashAholic Says:

    Excellent post on the importance of budgeting. Many people refuse to budget because they feel they either have too much money, or not enough money.

  12. 12
    DDFD at DivorcedDadFrugalDad Says:

    Nice post!

    About once a month I spend 10 minutes creating a budget spreadsheet from scratch.

    I do it to do what if analysis and to see if I come up with anything new compared to the actual budget.

    I find the more you think it through, the easier and more motivated you are to act.

  13. 13
    MGB Says:

    Nice spreadsheet. My wife frequently makes fun of me for my expense tracking, but I think deep down she appreciates that someone is keeping an eye on things. From my experience, I’ve found that tracking to a budget actually isn’t that useful in instances (like ours) where monthly expenses are fairly constant and there is self control on discretionary items. We include a contribution to savings as an “expense” each month to help automate putting money away above and beyond retirement savings.

    I update my spreadsheet once per week and use it for a few purposes: 1) make sure all the bills get paid each month and balance our checking and savings accounts; 2) track where all the money goes (line item tracking for cash, credit cards, checks, and on-line bill pay); 3) annual balance sheet check-up; 4) amortization tables for auto loan and mortgage; 5) keep track of total cost of “events” like a vacation or house project; 6) real-time picture of how many months of expenses our savings represent in the event that we both lose our jobs and 7) what-if analyses for major decisions or life events.

    Having all this info in one place (and backed-up frequently) makes it very easy to track all things financial and provides some peace of mind that our finances are under control.

  14. 14
    Mary Hall Says:

    @MGB: I couldn’t have said it any better. It’s fairly easy for me to forget that small purchases add up so having a spreadsheet actually helps me see the bigger picture. I didn’t really consider #6 in your list though until now, so thanks!

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