What do you measure and why?

ChesterDog

Yes, I accept that.

But my 'accounts' these days are a recording of my financial life and financial health rather than a statement of business trandactions with taxation in mind.

So I do record things in a manner that is not in keeping with business accounting principles.

For instance, I record investment growth or shrinkage as income (or negative income) while not doing the same for appreciation or depreciation of fixed asset values. I do this because it helps to keep me focussed on running a notional surplus as far of my 'job' of managing my investments goes, and living within my means.

Edit. Actually, Andy, you may have given me the incentive there to fully business-ise my accounting method.

That way, I can truthfully tell my wife that my new toy is costing us nothing. :-) (Especially as it should alway be worth more than I am paying for it).

AndyT678

ChesterDog wrote: »

So I do record things in a manner that is not in keeping with business accounting principles.

Me too. Life is just too short IMO. Hence why I mostly ignore P&L and cashflow because it's not an issue for me. I might pay more attention if I felt it was needed.

Thrugelmir wrote: »

Turnover is vanity, Profit is sanity but cash is always king.

Liquidating balance sheets often results in a disappointing outcome. More so if it's a fire sale.

Totally agree in a business environment but less relevant to my personal finance situation. I trust that I will be paid each month so cash conversion isn't an issue. My only significant asset that isn't pretty instantly tradeable with a known current value is my house. As long as I don't go nuts and wildly overvalue it I think my balance sheet is pretty accurate.

ChesterDog

Ha ha. I am torn now, having just discussed this with my wife over breakfast.

P&L is important to us because we no longer have a normal, reliable income.

I think I will switch to normal accounting procedures and record depreciation and appreciation rather than purchase costs and sale proceeds. Ater all, I do keep a very close eye on my balance sheet too.

Thank you for the thought-provoking posts.

oldfella

Perhaps I might although your approach seems conservative and means that you will continue to accumulate wealth for the remainder of your life. If that's your goal then great but shouldn't you measure your progress? Equally you could also say that it's important to run down total cash available in a managed and predictable way so that it doesn't fully deplete in your lifetime.

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I monitor the value of my investments, but as they go up and down it seems sensible to me to regard those as secondary. As long as my cashflow is acceptable, the general ups and downs on the investments are not of any great concern.

mgarl10024

What a great thread.

I keep track of things on a basic level in a spreadsheet. The rise of the high interest current account trend where you need a lot of them and some need DDs and almost all need minimum monthly payments, has meant that whilst I can automate most of it I like to keep track that everything is happening as it should - and this has led to ever more complex spreadsheets and a manual process that isn't scaling well (i.e. me!).

I often have dreams of writing software to track it all and never quite get there...

enthusiasticsaver

Interesting question.

I monitor income and expenditure as we are approaching retirement and I am keeping track of our essential everyday spend to ensure it is in line with our projected income after retirement.

As I said above I keep track of projected income in 3-4 years time when my OH retires in 2018 and I retire in 2020. That involves reading pension statements from cover to cover and assets which could give us income - ie high interest current account accounts, stocks and shares isas and fixed term bonds.

At the moment I am aiming to save the difference between projected income and current income.

clear_as_mud

I track nothing anymore, except to have a quick nose at my internet banking every week or so.

As long as my wages are going in, I know my bills will get paid

It's on my "to do ASAP" list to look into my pension though. At the moment I don't have any knowledge on them, don't understand how they work, what mines invested in etc.... I want to be able to understand this and keep track of things soon.

Pincher

Zoopla tells me what my houses are worth.

You would have thought the Interest Only mortgage makes it easy to work out what my net asset is worth, but capital gains tax will really make a dent if I sell. After nearly 20 years, it's mostly capital gains. Provided I don't sell, the "networth" is working for me.

AlanP_2

I use Times Money to record all income / expenditure by category that goes through an account.

The only items not tracked accurately are cash spending which is just recorded as CASH OUT. The exception to this is if it used for something specific and can be easily categorised.

Cars & house value are ignored but Mortgage is in there so my Balance Sheet is not strictly accurate I guess but tells us what we want to know.

The mortgage needs to be paid out of income as opposed to by selling the house so see no added value to including it.

What we are essentially interested in is ensuring that the Monthly Budget works out, and if we need to withdraw some savings (usually for holidays or one off purchases) to make it balance we know up front and can make a decision about some of the planned expenditure.

Annual spreadsheet to give us an idea of how the next 12 months might look and additional spreadsheets to record longer-term assets (pensions etc.) and keep track of various current accounts and P2P accounts that are actually savings.

Mrs_Z

I have 2 very basic spreadsheets. One records monthly expenditure in terms of bills (mortgage, electricity, gas, cleaner, gym, holiday, etc). This is mainly because I pay most bills by direct debit and then at the end of the month OH gives me his half or what he owes. We don't have joint finances.

Another personal spreadsheet where I record and sum up any savings/investments and take away mortgage = net worth. Updated monthly. It also sums up how much we have paid off the new mortgage since May 2014 inc any overpayments. It is rather satisfying to see that figure getting larger every month and the total mortgage debt decreasing

I don't track pension as it is provided by my employer.
I don't track every day spending as I tend to divide my salary to 30% savings, 30% bills, 30% everyday spending/fun money. Sometimes I do a sweep from the surplus on the current account into savings before pay day if a nice round sum has accumulated.