Friday, January 11, 2013

Personal Finance Reporting

I wanted to dive a little deeper into one of my 2012 goals: Spending Less in 2012 than in 2011. I spent some time putting this together and I'd like to share it.

First, I track everything using I link all my accounts (except one loan company who doesn't want to play nice). Mint automatically pulls all my transactions in and adds labels. I find the labels are correct 90% of the time, so I go through my transactions twice a month just to make sure they're right. Mint also has a budget section which I use for all of our expected expenses. That way if something is wrong, I'll know about it (for example, once the garbage company didn't charge me and I got it resolved before it was a messy issue). I also get alerts when there's high spending or I get a fee (which seems to happen too often) so I can take care of it right away.

If you're not signed up for Mint, stop reading and sign up. Knowing how you're spending your money is a powerful way (the only way?) to get control of your finances. For most people, that will be enough.

And then there are people like me.

Once a month I take all the aggregated spending information from Mint and put it into my own spreadsheet. Personally, I use something similar to what Robert Kiyosaki uses in his game Cash Flow. It just makes intuitive sense to me. Here's what one of the character sheets looks like:

It's pretty easy. Income on top, expenses on the bottom. Subtract the 2 to get your monthly cash flow. Then you list your Assets and Liabilities. The difference between those 2 is your net worth. Hopefully that one goes up over time. Clearly, this example is very simplified.

I use Mint's labels for my expenses (plus a couple of my own labels I made). I also have 2 columns for using cash (well... checking/debit) and credit. Here's what it looks like (Yes, I changed every single number - I wish it actually looked like this).

I also have a statement from the previous year so I can compare how I did. I also have one that gives me year-to-date totals so I can see how I'm tracking.

Of course, Jessi sees this and freaks out. So I made a summary chart for her. Yes, I purposely removed the axis, but the lines are real. The faded lines are 2011. As you'll see, at the end of 2011, our cumulative net income dropped below the zero line. We didn't spend less than we earned. Hence my goal to spend less in 2012.

Jessi can look at this and instantly know how we did. A couple interesting points (in my opinion):

  • Our spending is pretty low, except for a few months where we have BIG expenses. May was the Prius, October was the Jackson property. The only reason September was high was because of inspections and appraisals.
  • There are a couple times during the year when our income peaks. One is during tax time (we spent so much last year, it was unusually high in March this year. Another is at the end when HP is doling out bonuses. The spike in August is when I sold the truck.
  • Had we not bought the Jackson property, we would have stayed above zero the entire year. We'll see if we can make that happen this year. :)
  • I love charts like this. I could stare at it for hours. I need to make more of these this year!

So that's how I do the reporting on our personal finances. That's how I know, to the penny, what the differences in spending are from year to year. You don't need to get this detailed - Mint already does a lot - but you sure learn a lot if you get this detailed.


  1. Anonymous8:44 AM

    You need to add the tenant deposit to liabilities also because you owe it back to them if they leave the place OK


  2. Got a comment earlier that isn't showing up... Here it is:

    "You need to add the tenant deposit to liabilities also because you owe it back to them if they leave the place OK

    Excellent point! I updated my actual balance sheet to reflect this. Thanks for the catch (and sorry blogger/disqus isn't showing your comment).