4 · What a household balance sheet is
A photograph of your finances on one day. Everything you own on one side, everything you owe on the other. The difference is genuinely yours.
The budget is a film — money moving over time. The balance sheet is a still photograph: where the household stands on a particular date. Businesses have produced one for centuries, and the reason households rarely do is habit rather than difficulty. It takes about twenty minutes.
Assets are what you own: the house, the cars, the bank accounts, superannuation, shares, the caravan. Liabilities are what you owe: the mortgage, the car loan, the credit card, the study loan. Subtract the second from the first and what remains is your net worth — sometimes called equity.
Net worth matters more than income, and it is the number most households have never worked out. Two households on identical salaries can be in completely different positions: one with $400,000 of equity and no consumer debt, the other with a leased car, a card balance and nothing behind it. Income tells you what arrives. Net worth tells you what has been kept.
Why once a year is enough
A balance sheet is not a thing to watch. Its value comes from comparison: this 30 June against last 30 June. The direction of travel, and why it moved, is the whole lesson. Did net worth rise because the house was revalued, or because debt actually fell? Those are very different years, and only the second is under your control.
What goes on it — and what does not
| Assets — what you own | Liabilities — what you owe |
|---|---|
| Cash and savings accounts, term deposits | Mortgage on the home |
| Emergency fund (held separately, earns interest) | Investment property loans |
| Superannuation — always owned by one person, never joint | Car and personal loans |
| The family home | Credit cards and buy-now-pay-later balances |
| Investment property | Study loans (HELP) — in their own category, last |
| Shares and managed investments | Anything owed to family, if it is genuinely a debt |
| Vehicles, caravan, boat (they depreciate — see below) |
Three practical rules make the exercise honest. Value the house at what it would actually sell for, not at the optimistic number. Include every debt, including the ones that are embarrassing — the forecast is only as honest as the list. And record the institution against each item (which bank, which fund, which insurer) but never the account number: that field exists so the If something happened page in Section 14 can be printed for an executor.
How the app handles it
There are two balance sheet tabs, and the difference matters:
- Balance sheet — where you stand today. Fully editable. Drag any item between categories; tap it to edit the details.
- Projected Balance Sheet — the same sheet walked forward year by year on your assumptions. A projection, not a record, which its heading says on every year.
Items carry their own behaviour. Property grows at the property-growth rate; vehicles depreciate by a percentage of their remaining value each year (which is why a car never quite reaches zero); super and investments grow at the investment return; cash earns the cash rate. You can override the growth rate on any individual item.
Two things about super
Super always belongs to one person. Set Whose? on each super account. Anything left as joint cannot be drawn as that person’s pension in the retirement projection, which is the usual explanation for “my partner’s drawdown is not appearing”.
Super usually does not pass under your will. It is paid at the trustee’s discretion unless there is a valid binding death benefit nomination. Because most Australian households hold the bulk of their wealth in super, this is arguably the single most important fact in the entire handbook. Section 14 deals with it.
Study loans behave unlike anything else
A HELP debt sits last, in its own category, with no repayment figure — and that placement is deliberate. It charges no interest. It is indexed once a year on 1 June at the lower of price growth or wage growth, so it cannot outrun wages. Nothing is payable while income is below the threshold. It is cancelled on death, except for a repayment already raised on an assessment. Enter the balance from myGov and the app works the repayment out from income on the Income & tax tab.
Why is my HELP balance going up while I am paying it? That is real, not a fault. Indexation applies on 1 June to whatever is owing at that moment, and your compulsory repayment is not credited until your return is assessed — after that date. So you are always indexed on a balance that has not yet had this year’s repayment taken off. If the repayment is smaller than the indexation charge, the balance rises despite paying. It corrects itself as income grows.
The stock and the flow
One idea ties the budget and the balance sheet together, and once it lands the app makes complete sense. Nearly every important item exists twice:
| The flow (Budget) | The stock (Balance sheet) |
|---|---|
| The Mortgage envelope — what you pay each fortnight | The mortgage balance — what is still owed |
| The Emergency Fund envelope — what goes in each pay | The emergency fund account — what has accumulated |
| A Savings goal envelope — the contribution | The named fund growing in the forecast |
| Employer super and salary sacrifice on the payslip | The super balance, after 15% contributions tax |
The app links them, which is why the two Emergency Fund entries are not a duplication. One is what goes in; the other is what is there.
The app now shows the movement between them. On the Forecast tab, Where a year’s change came from takes a single year and separates the change in your net worth into the parts it is made of: money you put in, anything you bought or sold, debt principal you repaid against anything newly borrowed, and what your assets did on their own. That last line is the stock rising while the flow stands still — a house that gained $40,000 makes you $40,000 better off and leaves you not one dollar better able to pay a bill.
There is a button marked Explain this to me, and it is worth pressing at least once. It writes the year out as a sentence — net worth up this much, cash down that much, and which of the two the difference was. Households who have never separated the two often find that the year they felt poorest was a year their net worth rose, and that is not a contradiction. It is the stock and the flow, and it is the reason both halves of this app exist.