What’s your net worth? We all know money is not the most important thing in life… but it’s pretty far up there! Money can’t make you happy, but not having it can make you miserable.
To keep your money in perspective, you should view it as a tool to help you do what you want in life. It’s important to create your money philosophy so you know how you want to handle your money and know how much is ‘enough’.
One way to help you reach your “enough” is to track how much money you have against your goals. The easiest way to do this is to use a net worth tracker. I’ve tracked my net worth (and our net worth now that I’m married!) since 2007.
Below is the chart with our results; I’ve removed the $ amounts because I’m not quite ready to share our net worth with the world! I track three major areas: Total Investments, Liquidity, and Total Net Worth. Your net worth is your total assets minus total liabilities (debt). Each category of the tracker and chart comprises of the following:
1. Total Investments = 401ks, IRAs, stock accounts, etc
2. Liquidity (accessible cash) = savings/checking accounts, cash, CDs, etc
3. Total Net Worth = Total Investments + Liquidity + home equity – all debt
It’s good to track your net worth against your goals, but you need to be aware of the positives as well as the negatives of tracking it.
1. You keep focused on your goals
2. You control your money
1. You can become obsessed with it
2. It can start to control you and your emotions
The net worth tracker can be especially painful during market drops because you’re forced to track your investments as they shrink. You just have to keep in mind that you’re investing for the long term!
One business management saying is you manage what you measure. If you track your net worth and the various components, you’ll do a much better job of controlling your money and hitting your goals.
For you convenience, I’ve already created a template for you to use! You can find it on the Money Tools section along with some additional helpful tools or download it:
Check it out and let me know if you have any feedback to make it more helpful.