How to Create Family Balance Sheet

Balance sheet is the mechanism to help you calculate your Family Net Worth: you calculate the sum of all your assets and subtract all your liabilities to determine how much money you would have in hypothetical scenario, when you sell all your belongings and pay-off all of your debts. Below video tutorial summarizes how to calculate family balance sheet and calculate personal Net Worth.



Download MS Excel File referenced in the video

If you are interested in improving your balance sheet and increasing your net worth, make sure to checkout below 7 step process tutorial to learn how to improve family finances.



7 Step process to improve your finances

With all the demands of running a family, especially large family,  it’s hard to find time to make a household budget — especially if spend more than you make. It’s important to look household finances squarely in the eye, because that’s the only way to control them; otherwise, they control you.

Start by understanding what is your goal. Maybe it’s paying off debt, save for retirement, get money for child’s wedding or perhaps it’s a college fund. You don’t have to justify your goal to anyone, and envisioning it can help keep you on track.


Step 1: Choose your budgeting tools

I Recommend Excel for budgeting. But Paper works too. Pen and paper can be just as accurate as an electronic budgeting program, but financial software certainly makes the job a lot easier. It also reduces errors.

If paper feels right, an accounting ledger doesn’t cost much and is designed for credits and debits. In everyday language, credits are incoming dollars and debits are outgoing. You’ll also need a calculator.


Step 2. Discuss How To Save. Bring Everything to the Table

Everything that shows incoming and outgoing money, such as earnings statements, receipts, bills and bank statements, has a place at the budget table as income.  Everything that you spend goes into expense category. You’ll need a total for both categories. Sometimes you realize that you spend more than you earn and this gets people nervous. But dont’t be:  going through the budgeting excercise will help you control that.


Step 3. Find Out Where the Money Goes

The outgoing category needs more attention after you’ve got a grand total. The next step is breaking spending into subcategories. Yours might be Rental Payment, Utility payments (electric, water, etc.), Mortgage, Credit Card Debt, and Discretionary Spending (entertainments budget, lunch, clothing, etc.).

Discretionary spending adds up fast. A few dollars here for movie tickets and a few more there for dining out sometimes total more than a fixed bill that you pay every month. This is the subcategory where you can create the most change.


Step 4. Set Up Excel Budgeting Spreadsheet 

With the initial totals and categories prepared, now you can add everything to an electronic spreadsheet. This is where the budget begins to take shape. The goal is to get your debits (spending category) less than your credits (income category).

Download Microsoft Excel Budget Template File


Step 5: Start Practicing Budget

The ultimate goal of any budgeting process is to produce cost savings and create a better financial future for you. You can plan as much as you want, but the most important thing in any budgeting process is execution. And essential part of execution is to control discretionary spending

With the numbers in black and white, you can approach the monthly budget more realistically. Discretionary spending might be the only category where you can find and divert money toward debt reduction and saving.


Step 6: Pay Off Debts

Debt reduction is the main goal of many families. The only way to get there is to make at least the minimum payment each month. Paying more than the minimum obviously reduces debt faster, but it can also mean you’ll pay less interest.

Check with each creditor to be sure extra payments will post the way you want them to. In some cases, interest is a fixed amount that won’t change, regardless of whether you pay more each month.

Budgeting is both simple and complex. It’s only a matter of knowing what you earn, what you owe, and where money is spent. What makes it complex is deciding where to cut back and where to divert more money. For some families, debt is a real problem. Without enough resources, debt can mount and credit scores can tumble.


Step 7: Repeat budgeting again and make small adjustments, as needed

Once you have established routine you might need to come back and make adjustments. Review how your process is going to see if you are on track or not every few weeks and make adjustments as necessary. Good luck taking your finances under control. Also, make sure to check out below videos and online training courses to learn more about budgeting tools you can use to save more money

Smart Family Finance Video Tutorials:

Lesson 1: Smart Budgeting in Excel – Save More and Balance Income and Expenses

Monthly Budget in Excel – Download Microsoft Excel Source File Used in Above Video

Lesson 2. Why budgets don’t work – and how you can change that for you

Why Budgets Don’t work – Download Microsoft Excel Source File Referenced in Above Video


Lesson 3. How to improve family budget – Step back to see the big picture

  1. Budget should fit your long term goals (Important of setting goals first)
  2. Budget helps you build a set of rules to make decisions
  3. Document everything. Budget helps you see real financial picture
  4. Budgeting is collaboration with other on decision making

Family Budgets – See the Big Picture – Download the File Used in Above Video



Lesson 4. How to improve family Budget: Spending (Consumption) vs. Investment planning

  1. Family Finance and Budget. Different ways of planning
  • Spending vs. Consumption planing
  • Planning based on financial goals
  • Planning based on priorities

Definition of Investment: spending money on activities or assets to create future revenue stream

2. Example of Investments (Ongoing or Projects)

  • Get education to be eligible for higher paid jobs (Cash investment or Student Loan)
  • Learn a new skills to get promoted (No cash investment but time commitment)
  • Contribute to 401K (Before Tax Monetary Commitment)


Spending vs Investment – Download File used in Above Video


Lesson 5. Build Wealth without making a lot of Money

Questions we look at in the video:

  • Spending should not exceed Income. Track Spending and create budgets.
  • Establish Emergency Fund with Liquid Assets
  • Goal 1: Increase assets and decrease liabilities over time
    • It is OK to borrow for investment.
    • Borrowing doesn’t pay off for consumption
    • Focus on Growth of NetWorth
  • Goal 2. Convert regular Income into Portfolio Income
    • Invest 15% of income for retirement. Use Index Funds to diversify
  • Set Goals. Track Progress. Re-evaluate annually

Make sure to review below mobile friendly video on the topic:

Download MS Excel File referenced in the video



Next Steps:

  1. Download MS Excel Budget Planning File file
  2. Review my other Budgeting and Personal Finance Video Tutorials
  3. Subscribe to my email list to receive more tutorials like this one:

If you would like to learn more about Microsoft Excel Budgeting you can enroll into below online training courses:

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