Net Worth: Why I Track It

There are a lot of arguments over what you should and shouldn’t track in your net worth. Your house value? Your cars? Shouldn’t you care more about your investments balance than your net worth? And yet I track my net worth every month, religiously, and have done so since I was 16. (It was a lot less impressive at 16, I promise you.) Shouldn’t you care more about how much you save in a month than net worth?

Why do I track net worth? I like that it is an overall picture of my finances. I’m a pretty detail-oriented person, which means that I’ll obsess over why I spent $5.32 on that random dinner and why did I not cook my own dinner at home instead of looking at the big picture. Tracking my net worth helps me to focus on the big picture. Sure, I haven’t gotten much of a paycheck since March and won’t get much of one until September, but I’m maxing out my 401(k) quite quickly, which is exciting in its own right. By looking at net worth instead of just cash flow, I am calmed to know that my net worth is still going up even though my cash flow is currently terrible. Money is fungible.

If I’m prioritizing paying down my mortgage, then my investments balance isn’t going to be nearly as exciting to track, but my net worth is still going to be doing great! If I’m bummed that I’m not prioritizing my mortgage at the moment, but I am stuffing my entire paycheck into investments, then my net worth is still going to be doing great. It is an overall snapshot of your finances at any given time.

It’s just like why I like to smooth my budget throughout the whole year. Monthly spending can get super lumpy. Some months this year I’ve spent $4-5k and other months I’ve spent $2-3k. That’s just the nature of expenses. There are more travel costs some months, insurance is paid out in one big lump sum, property taxes in two lump sums, sometimes my condo board does special assessments, some months have more presents to buy, and soon there will be grad school tuition (though I won’t be counting that in the spending that I report here). This year, I did a spending estimate for the year by breaking things down by category/item for the entire year and then estimated which month and quarter this spending would fall in. I expect some quarters/months to be more expensive than others. I can look at that and know that I’ll most likely spend less money in Q3 and Q4 than I did in Q1 and Q2 and that helps me not obsess as much over my spending being high in a particular month, unless there were huge unexpected expenses.

I also like net worth in that it is reasonably anonymous. Your income and some of your expenses aren’t that anonymous, nor is the value of your house (public records and all), but until my mortgage is paid off (as far as I know), that is reasonably anonymous, as is my net worth. My 401(k) provider doesn’t know my entire net worth, nor does my mortgage company, my savings account bank, my credit union, or my investments firm.

That said, even though I track net worth, I don’t make goals against it. I don’t set a goal to hit $N in net worth by the end of the year. That would be silly when my stock investments could drop 50% in a year. I set goals based on how much I want to put into savings in a particular year, broken down by category.

Readers, how old were you when you started tracking your net worth? Why do you track net worth?

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18 thoughts on “Net Worth: Why I Track It

  1. Wow 16! That’s very impressive for a teenager to be that into tracking net worth. I didn’t start tracking net worth until near the end of college. I like to track net worth because it gives me piece of mind that all my accounts are in order and what my big picture looks like. It helps with being able to plan certain life events like tax planning, buying/selling a house, and if I have enough cash on hand to survive taking the leap into self-employment. I’m like you in that I don’t have a goal to hit by the end of the year, mainly due to investments fluctuating but also because I don’t want to get super stingy towards the end of the year if I’m off track. Overall, I have a general goal of being financially independent by age 40 with 25x annual expenses but I’m not sweating it if along the way that changes.

    • Well, at 16, to be fair, it was tracking my assets, which was mostly just my savings account and CDs. I didn’t know liabilities even existed yet! Yup, I have a general goal of when I’d like to hit financial independence too, but I don’t necessarily plan on stopping working then.

    • Cool! I’ve debated reducing the net worth tracking frequency to only quarterly from monthly. I completely understand the bloggers that don’t post their net worth – but I think you should still track it for yourself.

  2. I was 28 or so… And I should have started earlier, because indeed it is something that can motivate you to keep going. Before that, I was happy if my bank account showed a plus. Any plus. And I just kept running in one place, spending some money, earning some money, spending some money. That’s no way to live :-) . I track my net worth because it motivates me to keep going. I also track my net worth because I do have a goal in mind. When I reach a certain net worth, I will be financially independent, and I can choose to stop working at that point. (Note: that does not mean I will stop working at that point).

    • Tracking is definitely a huge motivator to keeping going for me as well. I don’t know what I’ll do when I’m financially independent, but I have to say, this in between phase where I’m very much along that path is also pretty good in the level of freedom that it affords me.

  3. I started about 2007, I got into the habit because I realized I was going nowhere in terms of where I needed to be for a happy and prosperous retirement. I didnt have credit card debt, but had taken on car loans, student loans etc etc. Really from the minute I began to focus on tracking net worth it took off. My non real estate debt is gone, my salary has increased substantially, the rate of my contributions to retirement have gone way up,

    My wife and I bought a duplex that we lived in for a year and now rent out, and then we moved to a house that we believe will be a successful rental property in the future in an up an coming trendy neighborhood.

    I do want to start a blog just for accountability sometime in the future (just need to spend some time to get the format set up), but in my opinion even just entering everything into Quicken has played a huge part in helping us increase our net worth. It has gotten us to take positive steps that should help us in retirement (like enter into real estate investing)

    • Most people don’t keep up blogs for very long, but Quicken is super good! Definitely keep up with that. I have my own tracking mechanisms that I’ve kept up in addition to the blog. I’m definitely a huge fan of tracking, as that’s what I do. I use something similar to Quicken and I enter all of the transactions manually, but then it produces spending and net worth reports.

  4. 16 is a really impressive age to start! I didn’t start tracking my net worth until I was 23. I’m an accountant, but still, at 16, I probably couldn’t tell you what a net worth was.

    I also only publish quarterly expenses, not monthly, since they can be so lumpy. Then I use the quarterly and annual expenses to get an idea of the average month. I include the house and cars in net worth. But I only update the car value, not the home, and even then only every 6 months. It’s good to see exactly how much damage those cars are doing!

    • Quarterly expenses can still be pretty lumpy – each of my quarters was budgeted for drastically different spending amounts. I don’t really care about average or specific months, just the overall picture for the year.

      I do update the home value, but only when it changes by a decent chunk (i.e. $50,000 or more) because home prices can be a bit fidgety and you don’t really know what they’re worth until you try to sell. I counted the car as “money spent” when I bought it. That really hurt then!

  5. I actually just started tracking net worth this year. Like you I like the holistic view it provides on my finances.

    I have noticed that since I started tracking it that I have gotten way more aggressive in taking steps to increase it.

    • Good for you on tracking! An old blogger friend of mine used to say that what you measure, you improve. Don’t worry about blogging your net worth. Just track for yourself.

  6. We’ve been tracking our net worth for about a decade, around age 25. At first it was a way to track debt and our progress paying that down, but quickly became a way to track accumulation. We love that tracking our net worth reflects the items you said like our declining mortgage balance, and also motivates us to move more quickly on all fronts.

    • Yup, I love tracking net worth to see the accumulation. It is so rewarding! Sometimes it makes me want to not spend money in favor of saving it, but I think I’ve finally found reasonable balance on that at this point.

  7. I don’t really have time. I track what’s in mint and don’t really look at the rest on anything resembling a regular basis. Sometimes when I’m doing a thought exercise or am freaking out, I will check and add everything up, but that happens less these days.

    • Makes sense. That’s about what my boyfriend does, though he does seem to get excited around milestones these days. I guess I’m wearing off on him a bit!

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