• ETF Enthusiast

Continuously manage you money like a pro with these tools

Updated: Aug 5, 2018

#1 The Budget

Tracking your expenses gives you a very clear view of where your money goes to each month. This view helps you to educate yourself on your spending behaviour and equips you to make better financial decisions every day.

Do you know how much you spend on your car or on restaurants every year? If you fully commit to this journey I assure you that you will have an in-depth knowledge of everything that comes into or leaves your bank account.

Most businesses have a good understanding of their income and expenses because they need to publish annual financial statements for their shareholders to prove they are managing the business in the best possible way. So why should you as an individual be any different given that you own 100% of the shares in yourself.

Planning your spending is an important part of being financially responsible and this is the tool which should guide your planning and actions.

Template found here.

#2 The Personal Balance Sheet

This is a document which gives you a total view of all of your personal assets and liabilities. This complete snapshot at a point in time will help you to understand the financial position you find yourself in and can help you build or adjust a financial plan to improve this position. For example maybe a large concentration of your assets come from the house that you live in, a case like this would drive me to invest more of my money outside of this asset in something like shares before paying off more of my bond balance.

This total view of your assets and liabilities allows you to see you total net worth by taking all your assets and deducting all your liabilities.

At the end of each month (on a different tab each month) you simply log on to all relevant accounts and update your spreadsheet under each asset or liability.

By doing this consistently over the course of a few years you are able to see the trend of your total wealth over a period.

Template found here.

#3 Account List

You know that feeling when you create a shiny new account with all intentions to use it but after a few days you come to the realisation that you were a little too hasty and you are probably never going to use it? It happens way too often right…

When it comes to managing our money an account list helps us to keep track of all the vehicles we are making use of as well as detail the reasons we are making use of each account. This method will also ensure you take your time before opening any new accounts and ensure you have a very good reason why you are going to use it.

Template found here.

#4 Continuous Side Gig Management Document

Earning an additional income means extra money into your wallet but with it comes the responsibility of ensuring you manage this business proper and conduct the necessary administration that is required.

It is inevitable that you will have to include this business into your tax returns and therefore a continuous approach is the best way to manage the documentation and administration required. This means that every month you need to ensure that you record the income and relevant expenses from the business on a central spreadsheet and file the documents relating to these transactions in a logical and easy to manage system.

If every year you need to dig through your bank statements and search old emails for documents in order to complete a tax return then this is probably not an enjoyable task for you, but if you stay on top of this process and the administration required in a continuous fashion it will be quick and easy and you will better equipped to make decisions related to your side business on a daily basis.

See the example below which I use to manage my rental property:

Template found here.

ETF Enthusiast

Use your money to build assets which generate more income than you require to live