What is Net Worth Tracking?
Net worth tracking is the process of regularly monitoring and calculating one’s net worth over time. Net worth is the difference between an individual’s assets and liabilities, and tracking it involves keeping a record of all the assets and liabilities one has and updating them periodically.
This can be done manually by creating a spreadsheet or using software and apps designed for this purpose. By tracking their net worth, individuals can get a better understanding of their financial situation, monitor their progress towards financial goals, and identify areas where they can improve their financial health.
Net worth tracking can also help individuals make more informed decisions about their finances, such as deciding on investments, debt management, and retirement planning. It is an essential tool for financial planning and can help individuals achieve greater financial stability and security.
What Assets and Liabilities Should I Track?
When tracking your net worth, you should track all of your assets, which can include:
Cash: This includes money you have in checking and savings accounts.
Investments: This includes stocks, bonds, mutual funds, retirement accounts (such as 401(k)s or IRAs), and any other investments you may have.
Real estate: This includes any property you own, such as your primary residence, vacation home, rental properties, or land.
Vehicles: This includes cars, trucks, boats, and any other vehicles you own.
Go Do It!!!
It is essential you track your net worth on a schedule. Find an app or spreadsheet to help track your net worth over time.
Tracking your net worth is a useful way to monitor your financial health and progress over time. To calculate your net worth, you need to determine the value of your assets and subtract your liabilities. Here’s a step-by-step guide:
- List your assets: Write down all of your assets, including savings and checking accounts, investments, real estate, and any other valuable items you own. Be sure to include the current market value of each asset.
- List your liabilities: Write down all of your debts, such as mortgages, car loans, credit card balances, and any other outstanding debts.
- Calculate your net worth: Subtract the total of your liabilities from the total of your assets to determine your net worth.
It’s important to regularly track your net worth so that you can monitor your progress and make changes to your spending and saving habits if needed. Keeping a spreadsheet or using personal finance software can make it easier to track your net worth over time.