Personal Finance Case Study 02: create your personal finance dash-board

With the first quarter of 2017 in the books, I spent the 1st April doing what I do every month: I reviewed my finances and pulled all my numbers together in excel. We don’t have tools like Personal Capital in Belgium so this is my home brew. I love the process of digging through the numbers and pouring them in my nice excel sheet. This month I reviewed my budget spreadsheet extensively and I spent some time on creating a dash-board, which I wanted to share with you. In a quick glance this offers me a holistic view on how I’m doing with my finances.

 

So is this a net worth update?

Yes and no. Although I’ll be transparent with my finances, I do not intend to do a monthly net worth update. Why? Because, I think it’s a bit boring. Unless, you’re adding like a gazillion dollars to your net worth each month, I don’t think it is a particularly interesting read. And guess what, I’m not adding a gazillion dollars to my net worth each month. But working on it 🙂 … The day I do and that my net worth increase becomes an interesting read, I’ll sure make an update every month… Hey, is that a new goal 🙂 ?

 

My personal finance dash-board at Q1 2017

I’ve been thinking about the best metrics to follow. This is where I got the idea of creating my personal finance dash-board. In a few clicks I get a nice visual overview of my financial status. If you don’t have any tools to do this for you and you’re pulling all your numbers in a simple spreadsheet, it is really worth your time to take a few hours and build automation and visualization in your spreadsheet. I won’t spend time on how to do this, because any decent excel blog or google search will do this better than I can. But I will share my thoughts on a few key metrics you must keep track of, and how I visualize them.

Find here my personal finance dashboard:

Personal finance dash-board net worth

 

Here the components I track:

 

Net Worth Trend

As soon as you have a year or two of history, it is pretty easy to extrapolate the next 3 to 4 years and track your net worth trend. I use this to set up my goal for the current year of net worth building. As an extrapolation I keep it really simple. I don’t add compounding, I keep salary increases realistic and add in a slight increase of expenses. I have managed to forecast this quite accurately over the past years. And finally, after a few intense years with a lot of investments ( MBA / home purchase taxes / etc…) I hope to speed up my wealth building.

Adding this tracker to your dash-board is pretty straightforward: generate 3-4 years of extrapolated net worth and plot a simple bar graph or line graph.

Overall Net Worth Goal Tracker

You’ve got to have a net worth goal. Mine is 1,5 M euros by the age of 45. I built a graph that shows my progression over time and added some colors to show zones. I still have some massive work to do. I’m still in the deep red area.

 

 

Current Year Target Increase Tracker

As mentioned higher up, I break down my net worth goal per year. In 2017 I’m aiming to reach 130 k euros. I’ve broken this down to a monthly increase to target and mapped this on an arrow graph. I need to stay out of the red zone if I want to stay on track with my target. Q1 was mission accomplished on this front.

 

 

FI-index

Having a high net worth means nothing to me if I’m not able to live passively of my investments. I based this tracker on the 4% rule. This rule is a quick and dirty rule used in PF that states that if you have 25 times your annual expenses as a financial portfolio ( or I’d dare add rental properties), you are good to go and can call yourself financially independent. While there is obviously more to that calculation, my FI-index graph keeps my eyes on the coveted prize: financial independence. Right now my financial portfolio is little over 3 years of annual expenses. This excluded deferred retirement accounts as they do not offer the possibility to retire early without substantial penalties.

 

Loan tracker reimbursement

I track the principal amounts I’ve reimbursed on my mortgage and my student loans. In 2017 I’m focusing on my student loans and the objective is to pay my outstanding student loans in full. Its unlikely I’ll be able to add substantial amounts to my financial portfolio AND pay of all my student debt. So while this part of my dashboard will make massive progress in 2017, the needle on my FI index won’t budge.

 

Savings rate

I follow my savings rate diligently and am trying to meet a savings rate of 50% in 2017. As you can see on the graph I’ll make substantial improvements vs 2016 (the full story on my savings rate can be found here). Q2 2017 is a very big quarter as I hope to get my bonus which I’ll use towards paying back my student loans. Fingers crossed. I’m a bit ahead of my target for 2017, so I’ve got a bit of flexibility.

 

Anything else I can dash-board?

These are the most important financial metrics I want to follow. I’ve thought about making a dash-board of my goals which includes my health, learning and family goals. I still need to think how I could measure that. Any tips are much appreciated!

 

What about you?

Do you have your own personal finance dash-board? Which metrics would you add to this dash-board? Which tools are you using to track finances? Join the discussion in the comment section.

 

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  1. April 13, 2017
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