What is Net Worth anyway? Let me show you how to be a digi-fly on the page of 477 people’s bank statements + why you should track your own.

woman in jeans on floor, writing in notepad with a calculator with text overlay "what is your net worth?"

Here’s your double dare: Track your net worth.

Seriously.

I started doing this about 8 years ago (in November, 2009, to be exact), and now I do it using the free Personal Capital (which automatically updates everything for me — it's awesome!).

And it's one of the best financial moves I've ever made *pats self on back*.

What is Net Worth, Anyway?

Before getting into the “why” behind tracking net worth – plus those 477 people’s bank statements – let me go ahead and tell you what it actually is.

Net worth measures what your personal assets are worth, meaning everything that’s left after you’ve subtracted out debt. When calculating it, you include both assets (home value, retirement account balances, investment accounts, savings, jewelry, etc.) as well as liabilities (mortgage, car loan, student loan, credit card debt, etc.).

Pssst: You should definitely include all debts in your calculation. But what exactly you include on the assets side is more personal. For example, while our Ford Focus is worth around $6,500, I don’t personally include car values in our net worth because it’s not likely I would liquidate my car…especially since we only have one…and ever “realize” or get that money out of it. But our home? Well, sure, we might sell that one day and rent or buy a new home.

Once you subtract the two, you can see how much you’re “worth” (had to put quotes around that one, because you’re obviously priceless! We’re just talking about your money stats).

How Tracking Your Net Worth Will Change Your Relationship to Your Money

Tracking your net worth really takes you out of the day-to-day burdens and joys of money management and into the realm of “what’s my financial picture look like?” Or, “where am I headed financially?”

Or, “what the heck went wrong – seeing how I’ve worked and earned a decent salary these last 10 years and have a Goldilocks’ bowl of “borrowed” porridge to show for it – and how can I change that?”

I’ve worked and earned a decent salary these last 10 years and have a Goldilocks’ bowl of 'borrowed' porridge to show for it – how can I change that? Click To Tweet

These thoughts and ideas then trickle down to your everyday money behaviors.

Talk about creating a {positive} ripple effect!

Let me give you 3 big reasons why you tracking your net worth is the way to go:

Reason #1: It Might Actually Make You Feel Better about Your Finances

One way that this changed the way I felt? One year I noticed that even though my savings hadn’t grown very much…my assets had grown significantly.

So, I had spent the better part of several months feeling down about how little progress I had been making financially, all for nothing.

How exactly, if we didn't save that much money, did our net worth actually grow? Glad you asked.

That was the year we paid off the last $25,000 in our combined debts just a few months after getting married.

That’s right; paying down debt adds to your net worth as well (score!).

Reason #2: What Gets Measured Gets Better

Maybe your financial system feels a little…broken. Rusted. Worn around the edges. But where are the bottlenecks?

You can’t WD-40 a chain if you don’t know where the kinks are. Or a squeaky door hinge. Or fill in the blank with your favorite WD-40 fix.

Tracking your Net Worth gives you an idea of what’s working and what’s not because you immediately can see your assets versus your loans, which loans you have and how much, and the general trend of your finances (are they going up? Treading water like a mallard duck on a frozen lake?).

Are you finances treading water like a mallard duck on a frozen lake? Do this. I dare you. Click To Tweet

And when you’re aware, you’re on your way.

Reason #3: Because It’s SO Much Fun to Look Back and See How Far You’ve Come

Tracking net worth is sort of like keeping a money diary. For the rest of your life, you can look back on different periods of your life and reflect, at least from a money standpoint (which, really, is the root of so much!) how things were going, what was going on, how things improved, etc.

This is a huge plus when trying to reflect on things and progress forward.

Because if you’re anything like me, then while in the thick of things you don’t necessarily feel so hot about where you are. But when you look back over it all through the crumbs you’ve left yourself – facebook photos, scrapbooks, journals, etc. – a brand new picture gets painted.

You start to make sense of older seasons of your life, which helps making sense of this current season of your life a whole lot easier.

Okay. You get it. I want you to track your net worth. I hope you do!

Now for the fun part – I won’t leave you hanging on getting to be a digi-fly on the page of 477 people’s bank statements. 477 Personal Financial Bloggers are tracking their net worths PUBLICLY (nope – not me!). So go ahead…you know you wanna be a fly on THAT digi-wall.

2 replies
  1. Mrs. Adventure Rich
    Mrs. Adventure Rich says:

    Tracking our Net Worth has been one of the most impactful strategies for our finances. It helps us stay motivated when we don’t have specific “pay off this debt” or “save for x” goals. We can always target growing our Net Worth!

    Reply

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