Assets and Savings

Use the first tab of this folder to enter the market values of your families’ regular assets from December 31 of the previous year. If you begin using this program in the middle of the year, look back at your balances (these non-retirement assets) from the beginning of the year and enter those balances so that they can grow correctly by your assumed nominal growth rate. Note that the cash value of life insurance policies is automatically filled in from information you provided in the Estate Folder about your life insurance policies.

When using Economics Mode, all of the regular assets entered here will be assumed to have the same nominal growth rate that you enter in the Assumptions panel. In Monte Carlo mode, these regular assets will have the growth rate associated with the asset class you assign to regular assets in the Monte Carlo area.

You only need to update your regular asset balances once each year at the beginning. The amount you enter grows for a full year by the percentage growth rate you specify in the Assumptions area.

Use the second tab to specify the amount your family intends to save over the coming year. Saving here refers to the intended increase over the coming year in the families’ regular assets. The program solicits this saving information so it can compare its saving recommendations for the coming year with the amount of saving your family is actually expecting to do. If you ignore this tab, and you may, you would then also ignore the Current Year Recommendations report which simply reconciles what you say you are actually saving with what the program recommends you should be saving.

The program also uses your family’s actual saving to calculate actual, as opposed to recommended, consumption over the coming year. Actual consumption in the current year is calculated by subtracting from current-year total income the sum for the current year of actual saving, taxes, special expenditures, recommended life insurance premiums, housing expenditures, and retirement account contributions.

Contributing more to regular asset accounts is one way to add to the stock of regular (non-housing and non-retirement account) assets. Another is to purchase more regular assets than one sells. A third way to add is to repay loans (apart from mortgages). And a fourth way is to keep saving the real (inflation-adjusted) asset income earned on regular assets. These four ways in which you can add to your regular assets are considered in the first four fields of the Current Saving tab. The following two fields indicate ways of reducing one’s regular assets. The first of these two ways is by receiving income on regular assets that is not invested. The second way is to engage in new non-mortgage borrowing. Summing together the four ways of adding to regular assets and then subtracting the two ways of reducing regular assets, yields total current saving—the bottom field on the current saving tab.