We have two Master documents that outline our finances – Net Worth Spreadsheet and the Money Field Manual.
The Net Worth Spreadsheet is a Microsoft Excel document that calculates our net worth. It is a monthly accounting of all of our financial accounts (banking, investments, … anything with a number) and excludes credit cards. It is the quantitative accounting of our finances and it includes our financial map.
The Money Field Manual is the qualitative explanation of our financial setup. It is a Word document that explains the purpose of each account, the point of contact, and how each of the pieces fit together.
Together, they will give you a complete picture of our finances.
The goal of this document is to act as my proxy if I'm unavailable (unreachable, dead, incapacitated, whatever). It's taking all of the knowledge I have in my brain and dumping it into a document so someone doesn't have to guess what I was doing. And it's written in a way that is as basic as possible, making no assumptions.
It has five sections:
- Net Worth Spreadsheet Legend
- Bank Accounts
- Investment Accounts
- Direct Investments
- Insurance
Net Worth Spreadsheet Legend
The Net Worth Spreadsheet is a pretty straightforward document as it is, but I figured anything is up for misinterpretation.
Plus, whenever someone will need this will be a stressful time… so let's make it as simple as possible.
It explains how all the sheets are related, what updates where, and someone reading the document will be able to continue the accounting (not that they will). This also acts as a reminder for myself in case I forget how I set something up.
Bank Accounts
Someone looking at the spreadsheet and at our list of bank accounts is going to wonder why we have so many – but each has a purpose and it's outlined in this section.
For example, we have a total of five banks but only three of them serve a function other than as a holding account (the other holding accounts still exists because I haven't closed them yet). The page explains what role each plays.
One account is our brick and mortar account, another is a business banking account, and the last one is an online bank where we execute most of our transactions. That online bank is the hub in our financial network.
Investment Accounts
Unlike my bank account opening spree back in the days of Bargaineering, I only have two brokerage accounts and this section explains the purpose of each.
The investing strategy section is more detailed than the banking, with my target asset allocation as well as how those assets are distributed within each of the accounts.
I use Vanguard as one of my custodians and I have a Rollover IRA, Roth IRA, and a taxable brokerage account. One of the tricky things about those different types of accounts is that it's often a challenge to get your asset allocation right. It's even harder to reverse engineer what I was doing if you start with just the accounts.
The document explains what's what. For example, I don't put our bonds into our Rollover IRA, which is a tax-deferred retirement account. The general rule of thumb is that you put bonds in a tax deferred account because bonds generate income and you'd be taxed on that income if it were outside of a tax deferred account.
Bonds have had low yields recently and so it's actually better to have stocks in those tax deferred accounts, but that's not why we do it. If we needed to access our funds quickly, we'd liquidate our bonds first because they're the least volatile. If they're in tax deferred accounts, we'd take a massive penalty. That's the #1 reason why… the fact that it's more tax efficient right now, due to low yields, is simply a bonus.
OK so that whole explanation is not possible unless I write it out in a Word document.
Direct Investments
For a while I made a few direct investments, or angel investments, in companies. I don't do that anymore, that'll be a post for another day.
This section of the document contains all the contact information of each investment, who was the lead investor, my relationship, who to call if you have a question (in case it's not the lead investor), as well as anything else that could provide clarity on the deal.
The key here is that these are deals that don't exist outside of legal documents. You can't log in somewhere and see them. Without this and the listing in the spreadsheet, it would be difficult for someone piecing it together to even find them because they wouldn't know where to look.
Insurance
Pretty straightforward here – a list of all the different insurances we have, levels of coverage, and the company we have them with. Ours are all with one company so it's pretty easy to understand.
Lastly, remember to update it. That's key. While having an outdated copy is better than having nothing, an updated one is best. I update the spreadsheet each month and anytime I have to remove or add a column, I make sure to review the Word doc.
Do you have a Money Field Manual or something similar? How would you augment or improve mine?
Hai Jim, we have a similar document, but we just call it our Balance Sheet. But we may adopt your fancy name “Net Worth Spreadsheet Legend” ☺
One more document that we have is stating all of our financial information: our ID numbers, tax numbers, bank accounts, house, car, insurance, bank safety deposit information. Sometimes I feel that this document has too much information, but if my husband and I are “unavailable” at the same time, it would be easier for a person to handle everything.
I’m a very literal namer 🙂 — my first website, Bargaineering, was a portmanteau of Bargains and Engineering. 🙂
We have the same information but it’s a tab in our Net Worth Record spreadsheet, sometimes I forget. 🙂 It also has other useful numbers that aren’t always important (like bank routing numbers) but saves you a second when you need them.