Net worth change formula

The formula for the change in your net worth is essentially the following:

Change in value of investments + Net income for the month – Expenses

My investments have been gaining quite a bit of their value back in the last couple of weeks, to the tune that I might actually be able to hit my net worth goal of $100,000 this month! If my investments go back down again, this could change, but with my current investment accounts balance change from September 30th, my estimated expenses remaining for the month, and my regular net income, I will hit the goal!

To be honest, I’ve been kind of obsessing over this calculation all month and it’s starting to drive me a bit crazy. I’m starting to wonder whether setting net worth goals is really a good idea since achieving them is so dependent on how the markets are doing. Setting savings goals, on the other hand, is a good idea because it motivates me to actually save that amount each month and for the year.


3 thoughts on “Net worth change formula

  1. I don’t like net worth goals for that very reason. We check our net worth about once a year, around tax time. But I don’t think it’s actually very healthy to look at your long-term assets too frequently. Short term, yes, but long term not so much since they’ll go up and down many times before you need to tap them. Saving is definitely something we can control. The stock market we cannot.

    • Agreed. $100,000 is a beautiful round number, but I think after this experience, I’m going to stick to only setting savings goals instead of setting goals net worth goals. It’s interesting to project net worth, but I think that setting a specific goal is bad for my mental health.

      One of my problems with even setting savings goals though is that a significant portion of my compensation is in company stock (which I have set to sell automatically at vest), so I try to use a “low” estimate of the stock price when I set savings goals. If I take the company stock price out of the picture, I almost have to just say “save as much as possible”, which isn’t a very measurable goal, is it?

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