Different Ways to Track Your Personal Finances

When it comes to tracking your money the saying “different strokes for different folks” is certainly true.

Personally, I’m not very good at tracking my expenses to the penny. I did it once, actually.

Usually I set a “guided budget” and even though my numbers may not fit perfectly within my original estimates, I still normally spend around the same amount of money each month.

As far as tracking my investments and savings go, I just log into my accounts a couple times per month and see where I’m at. Easy.

And net worth tracking? For me that may happen once or twice per year and it’s just out of pure curiosity.

Even though I’m not keen on tracking my financials down to the penny I still think it’s fun to read other’s reports. (Yep, I’m a dork. That’s what I consider fun.)

And I kind of admire those people who do pay such close attention to their money. That takes some serious self-discipline.

I wanted to highlight some of the different ways you can track your personal finances.

I hope you enjoy reading these as much as I do!

Using Balance Sheets and Income Statements

Balance sheets. These used to be my favorite thing to do in accounting classes. (I told you I’m a numbers dork.)

Apparently balance sheets are not only great for keeping track of a company’s financials but also for keeping track of your own personal finances.

Over at Planting Our Pennies the blogging duo use Balance Sheets and Income Statements to track their personal finances. They also create graphs (I’m guessing with the help of Mint.com) for easier dissection.

Check Out: May 2014 Balance Sheet and Income Statements.

Tracking Rental Property Income

As you probably know by now I really, really want to buy an investment property and have just started saving for one.

So I was really glad to stumble on this next blog earlier this week. The blogger, FI Fighter, invests in rental properties not only in his home state of California, but he also has out of state investments in places where real estate is cheaper.

It’s pretty fascinating to read.

Check Out FI Fighters May 2014 Cash Flow Statement.

(Also, if you’re interested in real estate check out No Nonsense Landlord. I couldn’t find any exact number cash flow statements but I’ve been enjoying this blog lately.)

Tracking Net Worth

What seems to be the most popular among the personal finance world is tracking net worth.

For me, I don’t get it.

There are so many things that could go wrong with tracking net worth. For instance, if you look up the Kelley Blue Book Value of your car and list that – are you really going to get that much money if you sold today?

The same goes for houses. You’re going to get what someone is willing to pay you. Now what Zillow tells you your home is worth – because sometimes they’re pretty far off.

Then there are things to think about like debt load, the stock market, and so on.

I mean let’s say you take out a million dollars in debt. You have 2 million in assets so technically your net worth is 1 million dollars. But what happens when you can’t pay your debt back and have to file bankruptcy? Your net worth returns to zero….or into the negatives.

Another example: let’s say there are two people with 1 million dollar net worths. One of these people have 1 million dollars in debt (see above) while the other has zero debt. Who’s better off financially?

The person with no debt. But if we go purely off of net worth statements then they’re equal…..

Too many variables.

If you’re interested in reading more, check out this article by Financial Samurai; Your Net Worth is an Illusion Sorry to Spoil Your Delusion

But just because I am not a fan of net worth doesn’t mean you shouldn’t be either. Decide for yourself.

In the meantime you can check out some of these net worth posts:

• May 2014 Net Worth Update @Debt Discipline
• May 2014 Net Worth Update @Lisa vs the Loans

Tracking Your Budget

There are many ways that you can budget.

Some people like to use zero sum budgets which entail that you spend all of your money on paper before you start the month. While others have variable budgets and adjust monthly.

Here are some different budgets for you to check out:

• June Budget Breakdown @Club Thrifty
• September Budget @Done by Forty
• Real Reader Budgets @ I Hear Budgets

As you can see, there are so many ways you can track your personal finances. Unfortunately there is no one size fits all approach. You’ve got to get your hands dirty until you find what works.

What systems do you use to track your finances?