Quick disclosure on today’s post. While I am talking about money this post in no way represents financial advise.
And we are back at it for my second post in a my financial wellness series. Last month I shared with you my financial diet. We are still on that diet in my house and loving the discipline it brings us. It is really holding Mike and I accountable for our spending. So now that we have our spending under control (and hopefully you do too) I want to share how we are seeing our savings in a bigger picture. And I’m starting with net worth.
Yes, saving money monthly is great, but getting a bigger picture of your personal finance is important too. In other words, I want to see how my money is growing! I want to know what my net worth is too.
The Road To Financial Wellness
Long before there was a Mike and Amy, there was just Amy. She was good with her money and clear financial goals, like buying a home and being a financial independent single woman. But I never tracked how my money was growing and didn’t realize the importance of that. When Mike entered the picture that all changed.
Mike had been tracking his money every month and knew his net worth! The only thing I knew about net worth was what I saw on Bravos’ Million Dollar Match Maker (I know you all used to love that show too). So when Mike introduced it to me to his tracking method I was blown away. Tracking your net worth isn’t just for millionaires, it’s for regular people too. Now don’t be intimidated by any of this because dealing with money can be.
I’m sharing two very basic ways to track your money. First up is a monthly tracking process that i do every month. Next up is a quarterly tracking process to calculate my net worth. Both are easy to do and I’m helping you get a started with my free tracking template. You can get it free by signing up here.
Monthly Tracking
Tracking your money monthly is extremely important to understanding your full financial picture. Each month I track all of our money. From our checking account, 401K accounts and any random money sitting around the house for a rainy day we track it all. You can see all my unique ways of saving money in this post here.
With this monthly method I can see our money grow, hopefully, month over month. It also allows me to see where our money isn’t growing. Take my 401K for example, the goal is to have it grow each month. If I notice it’s on the decline, it’s time to start reevaluating what I’m invested in.
I’ve created a simple to use template for tracking your assets on a monthly basis. The template includes all the items that you should be tracking and includes all the equations you need. You don’t need to be a financial wizard to complete this spreadsheet. There are easy to follow notes in the spreadsheet.
You can get my easy to use monthly tracking template for free by signing up here.
Net Worth
The other item I love to track is our net worth. Your net worth is the measure of your financial health or put another way the wealth you have as a person (or a couple or family). I can’t take credit for this one though, Mike introduced me to tracking our net worth. He would track his on a quarterly basis and once we got married I got to join the fun.
Raise your hand if you know your net worth. or know how to calculate your net worth? It’s ok if you don’t know. A true calculation of net worth takes into account your assets and liabilities and gives you a concrete number. What I love about tracking my net worth is I know exactly where I stand with all my money. I know that I don’t have to be a millionaire, but wouldn’t it be nice to be some day? A true calculation of net worth takes into account your assets and liabilities and gives you a concrete number.
You should not be surprised by your net worth. In some cases it can actually be negative. A negative net worth means that your debts exceed your assets. This could be the case if you just made a big purchase, like a home or a car. Or even if you are just starting out and paying off your student loans.
The great thing is you are in control of this and you can work to improve it. Each situation is unique so you have to look at the whole picture. The one thing that you should look for is an increasing net worth. Quarter over quarter you want your net worth to grow , even if it’s small. And you are 100% in control of this.
You can start tracking your net worth with my easy to follow spreadsheet. It has all the equations included and easy to follow notes, to help you start tracking your net worth. You can access it for free by signing up here.
Do What Works
In the end you need to do what is best for you. These are the methods that we use in our household and they work for us. I share this with you because it may help you. When I was young and starting out I had a good grasp on my financial picture, but I could have had a better one. Knowledge is power, so spread the love and share this post with a friend!
Hi dear, thanks for sharing this useful guide. I usually track all my expenses and liabilities separately but never really got down to calculating the net worth. It’s an interesting way to look at your financial position.
So glad you found it useful. Be sure to grab that tracking sheets, they are helpful!