My Net Worth and How to Track Yours

I’ve been tracking my net worth for a few years now.  I used to post about it monthly, but realized that wasn’t so useful for me and it was probably very boring for you.  So now I post around every three months.

What is net worth?  Well, put simply, it is all of your assets minus all of your debts.  Technically, it should include your possessions, but I don’t use those numbers.  The only possessions I count are my car and my house.  Why?  Because I also have debts associated with those two things in the form of a mortgage and a car loan.

Calculating your monetary assets is easy.  How much money do you have in your bank accounts?  How much is in your investment accounts?  Even if you can’t access your 401k for years, what’s in there?

For my house, I use the Zillow estimate.  In my neighborhood, I think that runs a bit high, but it’s the simplest way for me to pull an estimate that somewhat reflects the market in my area.

For my car, I use the Kelley Blue Book trade-in value.  I use that value because if I were to get rid of my car, that’s likely how I would do so.

Calculating your debts can be scary, but it’s important.  Do you have a car loan?  Mortgage?  Student loans?  What about your credit cards?  I don’t care if you pay them off every month or not.  Pick a date, and on that date, calculate what you have and what you owe.

Take the total amount you “have” and subtract it from what you owe.  That is your Net Worth.  Yes, it might be negative.  That’s okay.  The goal is just for that number to continue to rise. Maybe that means getting closer to zero, and that’s perfectly fine.  You just want your net worth to ultimately grow.

You’ve probably noticed that I don’t post actual numbers here.  While I am open about a lot of things on this blog, my actual financials are something that I keep to myself.  Why?  Well, it’s not because I’m a millionaire, that’s for sure.  It’s more because financial situations differ, and no one should feel the need to compare actual numbers to anyone else.  Plus, what I think is more important is the direction your money is going and by what percentage it is changing.   And then it’s important to look at why.

So looking at my numbers for the final quarter of the year: My net worth is on a solid upward trend.  I’m up 6.62%.  I’m very pleased to see this.  Growth is always good, and I saw a loss last quarter.  Ultimately, for the year, the numbers are up.  I’m hoping to soon see a change in interest rates to help my savings accounts grow a tiny bit faster in the new year.

But where did the change come from?  My investments all grew, some because of continued investment (retirement accounts), some from an improvement in the market itself.  My cash accounts are doing okay.  I came into a little bit of money following a family member’s death (nothing huge, but enough to make a mortgage payment or two), so that added a bit of cushion as well.  I’m also just trying to tighten my spending and be very exacting about where my money goes.  For 2016, I really need to keep an eye on my finances, and watching my net worth is a good way to go about it.

Megan Smith

Megan is a 40-something government employee in the Washington, DC area. She got interested in Personal Finance when she got out of college and realized that her paycheck wasn’t going to go as far as she had hoped. Since starting this blog, she has managed to buy a house and make a solid start on her retirement goals, and hopes to help others do the same. Here is her story:

In 2007, I was a gainfully employed 20-something with no debt but not a lot of knowledge about personal finance.  It was a co-worker’s comment about Roth IRAs that sent me to the internet, searching for information.  It was then that I realized that I really didn’t know a whole lot about personal finance and that my current financial situation was due a lot to inherent frugal tendencies, generous family members, a fear of debt, and good luck.  While that was working for me, clearly I needed a better plan.

While I had no debt, I was also pretty much living paycheck to paycheck and not worrying about going over budget (I say this as if I had a real budget) because I had an emergency fund set aside to cover any overages.

Except that’s not what an emergency fund is for.

So I did a lot of research, read a lot of blogs, and decided that I needed a plan.  I needed to budget.  I needed to know what I was spending my money on.  I needed to prepare for the future.

I decided to create a blog not only to make myself accountable to others but also to share the knowledge that I gained along the way.  I’ve learned so much from my fellow bloggers, and I hope that my readers can find something useful in what I have to share as well.