I completed an exercise which gave me the impression of having a thorough understanding of my personal finances. The exercise takes 5 to 10 min so it was worthwhile. I will try to repeat it once a year. It goes like this:

1. Write down your balance sheet
2. Write down your monthly cash flows

Balance sheet

Write down all major assets (A) and liabilities (L). In my case that is: apartment, morgage, equity funds, and student debt.

The sum of all assets minus the sum of all liabilities is my personal equity, which is a good measure of how wealthy I am. This personal equity is also a good yard stick to compare expenses against: If my personal equity is 100 is a monthly spending on 10 appropriate?

Monthly cash flows

The code to produce the plot (using mermaid) is pasted below.

graph LR

S((Salary))  --> NJL{Bank account}

ICA(Our credit card) --> |1. Expenses| C1[Our costs]
E(My credit card) --> |1. Expenses| C2[My costs]

NJL -->|2. Pay invoice| ICA
NJL --> |2. Pay invoice| E

NJL-- "3. Savings increase or decrease" ---A{Brokerage account}

NJL -->|Amortization | B(Bank)