Why a personal balance sheet is better than tracking expense

What’s in your personal balance sheet?

You may have already developed some pretty good personal finance habits:

  • Track your monthly expenses to ensure you're earning more than you spend
  • Saving a fixed amount each month
  • Built up emergency savings of at least 6 months during a crisis

But the money-in-money-out feature can only take you so far. That's because this method only gives you a picture of how you are doing month after month, and says little about your overall financial situation. When it comes to getting on top of your personal finances, tracking your expenses has its limits.

Why a personal balance sheet makes sense

Your net worth, on the other hand, is a snapshot that’s extremely useful in gauging your overall financial progress from year to year. Your net worth is the value in cash if you were to sell everything you own and pay off all your debts (also known as liabilities).

For some people, it might be scary to find out what their net worth is for the first time. This is the exact reason why they put off working it out. But there’s one big reason why your personal balance sheet is so important: By showing what you own and owe, it indicates how effectively you’re managing your money.

Doing so will help you to monitor and see how one financial decision may affect others. That way, there is greater transparency and you can make informed investment decisions to achieve financial wellness.

Learning from world-class investors

When using a balance sheet to evaluate a company, investors usually look for indications of how effective a company's management is using its debt and assests to generate revenue. This gets carried over to the income statement and is reflected as cash inflows / outflows.


The same principle can be applied to your personal balance sheet. Let’s say you have S$50,000 after subtracting your liabilities. How are you making use of this S$50,000 to grow your personal wealth efficiently? Are you leaving them to grow at 0.05% a year, or putting them in a higher interest savings account like the Multiplier, or investing them in stocks?

If you're wondering what your net worth is, here’s how the NAV Planner tool calculates it for you – all you have to do is interpret it.


How to keep track of your personal finances with NAV Planner

There’s no need to use an excel sheet to track all your assets and loans. The NAV Planner does all of that for you. For your assets and liabilities with DBS, the numbers will be extracted automatically. All you need to do is input your assets and liabilities that are with other financial institutions, and you’ll arrive at a complete personal balance sheet. 

This is what it could look like in practice:

Updating your Assets

  • Cash
    This includes all the emergency savings and spare cash you have. Whn you spend money with your DBS cards, or PayLah!, the amount of cash in your accounts will automatically be reflected in your assets view.
    To get as accurate an account of your cash assets as possible, simply add in your cash deposits with other banks. 

    Pro-tip: Track your spending efficiently with the Money-In-Money-Out feature. It automatically categorises your spending into buckets such as shopping, entertainment & leisure, and fees & charges, which makes it easier to identify areas to cut down on your spending.
  • CPF (Central Provident Fund) savings
    This is an essential item to add into the NAV Planner, as CPF savings form the foundation of our retirement plan. You can even specify which type of CPF account it is (Ordinary Account, Special Account…etc) because the tool considers the different rates and rules, to give you an accurate picture of the total funds in your CPF.
  • Investments
    All investments with DBS are automatically included. But for an accurate picture, add in your investments  that are with other financial institutions too! The NAV Planner tool taps on live price  feeds for all your equity and unit trust holdings, so that your investment assets are always showing up-to-date information.
  • Properties
    If you own a house, it probably accounts for a huge chunk of your assets. And if you own an investment property, doubly so. Updating the property values in the NAV Planner will result in a more complete picture of your assets and liabilities as it balances out the mortgage loan component of your liabilities.

Updating your Liabilities

Some of the items that you can input into the NAV Planner under this section include mortgage loan, personal loan, study loan and short-term credit with other financial institutions.

What does it mean if my net worth is negative? Interpreting the information

In theory, your net worth is the value in cash if you were to sell everything you own and pay off all your debts. For some people, this number could be negative, which means you have more liabilities than assets. 

You might be shocked if your net worth is negative, but it could be a common scenario for certain groups of people, such as fresh graduates who are just starting their careers. Perhaps, you have just used a large amount of capital to start your new business, resulting in negative net worth as well. 

Try not to be disheartened; there are ways to right this by making efficient use of what you have. Financial planning is a process – you just need to make sure you get better at money along the way!

What can you do to get better at money?

The vast majority of personal finance apps lack one thing: structure. The apps tell you how good (or bad) you’re doing financially, and lay out a buffet of options for you to pick and choose.

The NAV Planner seeks to provide structure to your personal balance sheet by providing cues on the items that you can start to tackle first. For instance;

  • If your cash savings are less than 3x of your monthly income: Beef up your emergency savings. One way is to spend less, save more. Another way is to keep cash savings in high interest rate accounts such as the Multiplier account, which can help grow your money faster than a basic deposit account.
  • If your net worth is projected to stay negative for some time: Make debt repayment a priority – you might want to consider refinancing your home loan to enjoy some savings.
  • If your debt is growing faster than your assets: Consider consolidating debts at a lower interest rate to help accelerate your debt payoff.
  • If you already have 3 months of emergency funds: Start investing if you haven’t – it is a good way to beat inflation, grow your assets and ultimately, build your total net worth.

Ready to start?

Speak to the Wealth Planning Manager today for a financial health check and how you can better plan your finances.

Let's Meet

Alternatively, check out NAV Planner to analyse your real-time financial health. The best part is, it’s fuss-free – we automatically work out your money flows and provide money tips.

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Disclaimers and Important Notice
This article is meant for information only and should not be relied upon as financial advice. Before making any decision to buy, sell or hold any investment or insurance product, you should seek advice from a financial adviser regarding its suitability.

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