Wealth Strategy: Track Your Net Worth
For those of you who have been following my journey, you’ve probably noticed that I’m a big believer in tracking and managing progress to help achieve desired goals. I can’t believe I haven’t explicitly written about this strategy before as I’ve been publishing my net worth updates for a couple years now.
That is, if your aim is net worth growth, track and record it on a regular basis.
I started in late 2006 with a net worth of around $200,000 and it has grown over the years to close to $312,000. Still not quite the $1 million that I’m striving for, but thankfully moving in the right direction.
Tracking your net worth is like giving yourself a grade every month (or whatever interval you like) and helps keep your spending/savings for the month accountable. The key is not to get down on yourself if you report a negative month, but to keep your eye on the long term trend.
For me, just the thoughts of reporting my net worth publicly for hundreds of thousands of people to see keeps me focused on my saving and spending habits. As a result, I often think about ways to increase my income in conjunction with ways to reduce expenses.
How to Track Net Worth
To start, net worth is your (total assets) – (total liabilities).
- Real estate – primary residence, rentals.
- Investment portfolios – registered, non registered, tfsa etc.
- Cash – chequing, savings, GIC’s etc.
- Tangible items – cars, collections etc.
- All Debt – mortgages, line of credit, student loans, credit card etc.
- Tax liabilities – This one is mostly for business owners.
- Other Money Owed
Net Worth Tracking Tools
There are many tools that you can use to track your net worth progress. For me, I like to keep it simple so I use a spreadsheet to figure out the difference between my assets and liabilities at any particular point in time. Here are some free tools that you can use:
Net worth isn’t the end-all-be-all of financial status, but it’s a great place to start to see where you are standing financially. It’s not about what your number is relative to others, but that you are making progress in the right direction over the long haul.
Do you track your net worth on a regular basis? At what intervals?