Asset Tracking, but how far?
On tracking accounts, I get the retirement account and company pension (if, you're lucky enough to have one), but where do you stop? Do you track your house value as well as your mortgage balance? Do you track cars, computers, flute, etc. ?Thanks!
I'm not overly concerned with having a very accurate picture of my net worth right now, so the only one I track is my car, and that's to remind me of why I'm working to pay it off so quickly - so I don't end up upside down on it. If you want to know your true net worth you'd probably add a lot more detail. But I'm not sure YNAB is the best tool for that, since you have to manually adjust every item for depreciation. A spreadsheet would be better.
I'm experimenting with tracking my mortgage & home value in YNAB to see of that visualization helps motivate faster payoff. I also have retirement accounts and my HSA in there as tracking accounts. I'm not sure yet if I will see any benefit to doing this, esp vs the added time spent adjusting balances monthly or quarterly.
I know other people have done it & had good results because of it, & others have not done so & had good results, so I think it just comes down to preferences.
The only non-financial asset I track is the house, and that is still sitting at the purchase price from 4 years ago, primarily to offset the mortgage loan in YNAB for net worth purposes. All other physical assets are assumed to have a zero real world value for net worth purposes as market value is difficult to determine beyond cars with KBB values so I see no point in including them.
And unless you plan to reduce the number of cars you own, any residual value in your current car will be sunk into its replacement anyway, so again, no point in tracking it. Our heirs can deal with residual values of all possessions after we die. They'll just clean out the house and have an estate sale for anything they don't want.
All 401ks, IRAs, HSAs, FSAs and brokerage accounts are included. We update investment accounts using a reconciliation adjustment transaction based on the last day of the month balance.
I don’t track anything that isn’t liquid in YNAB in any form. My tracking accounts are my HSA and my travel reimbursement fund for work, since I only get a set amount per year. Some people track all sorts of things, and find that they like having a picture of their net worth. For me, I feel it is too fiddly for me, even if I were to only update my investments once a year. My time horizon on my net worth is very, very long, and I have a financial advisor I meet with once a year and we do the full car, house value, installment debt, every last little investment etc. calculation then. (I should add that I also use Personal Capital just for funsies but know that it is giving me an incomplete, short term picture.)
It’s basically just a matter of how much you want to update YNAB.
FWIW I never, ever track my car value because it is my last resort asset. A car can be lived in, or at least, get you from place to place, in the event of the world going totally to crap and somehow everything gets drained and I get foreclosed on. It would never be sold because I need the money, and I intend to drive it until the wheels fall off, so how much it is worth is immaterial to me.
Also, we do not track Mrs. nolesrule's pension. We're fortunate that she even gets one (they stopped providing the pension to new employees, and there's always the risk they will freeze it or even liquidate it should the company go south). The information we have on the pension is just an estimate based on a pension calculator.
I do use a conservative pension estimate for determining how much retirement money we will need in our investment spreadsheets.
Checking, savings, cash, gift cards, and CDs are on budget accounts. TIRAs, Roth IRA, 401(k), investment account, 2 mortgages, 2 home values are tracking accounts that get updated once a month (well not the home values, the rental house is at purchase price and my condo occasionally gets updated as other units in my development get sold). I don't track my FSA. I pay for everything out of pocket in order to get CC points and file for reimbursements. The reimbursements are treated as income, because it really is just delayed income. And reimbursements are exclusively used to fund my "Next Year's Out of Pocket Max" category such that it is fully funded when the plan year rolls over (which is when I reallocate to This Year's OOPM category). I bought my car for cash, but don't feel like it is worth the effort to track it for reasons mentioned by others and because the value would be a relatively small slice of the pie anyway.
I don't track net worth in YNAB, because it doesn't do well with investments and I have Quicken. Even in Quicken, which deals with investments far better than YNAB, my house is sitting at the tax assessment value and I don't track the value of my car or personal property. For tracking purposes, I assume buying a car is an expense and just don't mess with depreciation over time. In the budget, I have a Car Replacement category; the value of the car is meaningful only as a time span before I'll need to replace it.
If I didn't have Quicken and wanted to use YNAB to track net worth, I'd update the value of investment accounts periodically and still ignore the car and personal property.
What I actually use tracking accounts for right now is to keep track of how much I've had withheld or paid in estimated tax payments. In an accounting sense, that's an asset that will be consumed by a tax liability when the liability is quantified accurately; but mostly it's to help me keep track of where I stand when I'm budgeting for income taxes. While working, I never budgeted for income tax, just let withholding happen and dealt with a refund or payment due; in retirement, I am responsible for managing the withholding and/or estimated payments, so income taxes enter into the budget.
Since I am using my extra cash to pay off my mortgage sooner, I track the value of my house and the mortgage, so I can see the net equity position. I plan to pay off my 30 year mortgage 10 years early, downsize the house and use some of that equity to fund my retirement savings. In addition, I track my various 401(K) plans, the cash value of my pension from a previous job (its small), as well as my vested and unvested stock awards from my current employer (the ones that will vest before retirement). I leave off the cars (fully paid for) as well as anything else. I think this gives me a good picture of where I will land in 4-5 years when I retire, which is an important number for me to know and track at this stage of my life. I have no idea what the value of the cars will be in 5 years, probably near zero, which is why I leave them off. YMMV, and my scheme may be too complicated for other folks.
I have just started experimenting with tracking my car values. Helps me convince the wife that buying another car I don't need is actually a good idea! I'm just turning liquid assets into a slightly less liquid form... :) You have to keep on top of the values though and always be prudent. The way I treat it is to consider, if the shit hit the fan and I needed to sell it, how much could you sell it for tomorrow. Which is never going to be the best value available.
I only track what I want to budget.
The only exception to this is an HSA account (medical) because it may get involved in my budget if I need to utilize it.
I do not track anything like houses or mortgage because it's just adding a lot of nonsense to the picture.
You have a mortgage? You don't care if it's $400,000 or $40,000. You still have to make monthly payments against it and the part you pay in principle or interest all comes out in the annual tax forms anyways. Until April 15th, you don't care. If you did, you would refinance and then you wouldn't care again.
Investments don't need to tracked in YNAB. Every single broker out there gives you pretty charts and monthly reports telling you how much you have, gains/losses, expenses. Until you convert this into cash, you don't care at the level of a budget. It's good to know about it for retirement purposes but this is such a long game (decades) that you really only need to look at them when it comes time to rebalance.
One of the more common mistakes people make with investments is that watch them too much.
I don't track any investments in YNAB. My cash-based accounts (i.e. including a cash ISA - tax-free savings in the UK) and credit cards are in YNAB on budget. Everything else is off-budget and the payments considered an expense.
I had pensions, house values, share ISAs, cars on budget in YNAB4 but it didn't add anything for the way we used it so I took them off.
Currently, I don't have any tracking accounts but I would potentially still use them to keep track on any loans to family or reimbursable payments.
Everyone should track their net worth.
Absolutely! I just had this conversation with someone. They don't budget in any form or track any expenses. I asked them a bit more about it, and they said, "I'm doing fine." I asked how they know that's the case. They changed the subject. The real answer is they don't know and can't know if they don't track it.
On another note, which might be true for many people, but I'm a lot more tactful by writing than in person. I can re-read my post, think about, revise it, etc. I can't do that in conversation.
I don't really bother with tracking personal assets that are hard to liquidate. Because of the liquidation, your price might be very different from your estimates and so you have a pretty substantial error to consider.
I could get some kind of estimates on my home but until it sells, the numbers aren't really worth much. Anyone who was around a decade ago might be able to relate.