Do you know your net worth? Do you track your net worth on a regular basis?
If this question leaves you at a complete loss, it’s time to get out a pad of paper and a pencil and get to scratching down your numbers.
I like to track our net worth about twice a year – once around the New Year and again around our anniversary in July. It’s become a sort of sentimental ritual that shows us what we can accomplish when we set about working on shared goals and how much progress we really are making even when – especially when – it feels we are trapped in the mundane of daily living.
Your net worth is basically what you own minus what you owe.
First jot down all of your savings accounts, retirement accounts, the fair market value of your vehicles, your house if you own one.
Now all of the debts that you owe, money your owe to credit cards, department store payment plans, student loans, credit cards, car loans and money you may have borrowed from your parents, friends or family members.
This is your net worth.
Why is it important? It’s your barometer. Your net worth shows you how you are doing from year to year, what your progress is, if you are gaining or losing ground. It can serve as your encouragement when you feel like you are standing still, in limbo making payments to your loans, and faithfully contributing to your retirement accounts but your checking account balance is rather paltry. It can really amaze you when you look back over a 7 year period to see how far you have come. It can ground you when you think you rock because you finally have a healthy checking account balance – but owe so much on your car that you are still in the red. It can spur you forward when you are on the brink of overflowing into the next $10,000 benchmark.
It can encourage you to see all of the progress you have made since you began that new habit, read that last book, started that new system.
Want to track your net worth with me? I’d love to see your progress from beginning your journey of reading this blog, adapting my systems as your own, implementing new habits.
You know what else can be really eye-opening about tracking your net worth?
Tracking your own net worth against the political climate and realizing that you have more control over your own personal finances through personal habits than Wall Street, the President of the Untied States, the economy, and the job market.
ACTIONABLE STEP: Get started with a slip of paper, a pen and your memory. Next week we will take it a step further, but for now, just give it your best guess.