Track Your Net Worth And Watch Your Wealth Rise

Why track your net worth? Simply put, because that what you focus on expands. As this number rises, you will loosen your grip upon the world. No longer will you feel enslaved to a job or another. You will be a giver in the true sense.

There are many that believe that if you can save over 25 times your projected yearly expenses, you can retire. Look at the numbers below.

Yearly Expenses Amount You Need To Save
$40,000 $1,000,000
$50,000 $1,250,000
$60,000 $1,500,000
$70,000 $1,750,000
$80,000 $2,000,000

By placing this amount in balanced index funds, you can pull from it what you need as it continues to grow for you.

These numbers, however, don’t need to be your goal. It’s simply a guideline to follow should you choose. Continue to focus on giving through your passions and the value that you’ll create for the world will reward you far beyond the above numbers.

What Is Net Worth?

Your net worth is all of your assets added up minus your liabilities. In other words, if you had to sell everything and pay off all of your debts, this final number would be your net worth.

For example, let’s say you had no money in the bank, but you had a car that was worth $9,000. Let’s say that you still owe $7,000 on the car.

(Your assets) – (your liabilities) = $9,000 – $7,000 = $2,000

In this example your net worth is $2,000.

What Should My Net Worth Be Right Now?

This answer is subjective and can only be answered by you.  However, I recommend reading this article as they have a formula for you to determine what your worth should be based on your age.

Setting A Net Worth Goal

The easiest way to change your focus is to set a goal and focus on it everyday until it becomes habitual.

A healthy net worth is a reflection of your thoughts. A negative one can shed light on poor choices so that they may be shined away for good. A positive net worth reflects your wise handling of money and decision making skills.

More About Assets & Liabilities

Net Worth = Assets – Liabilities.

Assets create more money for you.
Liabilities take money away from you.

Common assets are stocks & bonds, investment properties, businesses, cash, and other investments. Common liabilities are credit card debt, student loan debt, rental properties, etc.

Looked upon another way, net worth is the amount left after you sell all of your big items and subtract from it the debt you owe. Because of this, some items could fall into both categories. Let’s say you owe $150,000 on a mortgage, but the house is worth $200,000. You would have a $200,000 asset with a $150,000 liability.

Does Yearly Income Matter?

No. Yearly income is only about how much money you earn. Net worth is about how much you earn and keep.

A person that makes $300,000/year and spends $300,000/year on non-assets will have $0 at the end of the year, unless this income is passive and backed by other assets. If not, this person will always feel obligated to work for money unless changes are made.

Change your focus; change your world.

Useful Net Worth Tracking Tools

  1. Use a tool like Personal Capital that lets you link all of your financial account in one place.
  2. A budgeting tool like YNAB gives a total of your liquid assets (check out our YNAB review).
  3. The home worth estimator by Zillow allows you to track how much your home is worth.
  4. The Kelley Blue Book estimator allows you to assess your vehicle(s) current worth.
  5. A spreadsheet via a tool like Google Sheets allows you to put all this information together and calculate your current net wroth.

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