Wealth Strategy: Track Your Net Worth

This post was originally published in early 2009, but brought to the forefront as I believe it’s one of the more important strategies for growing wealth.

For those of you who have been following my journey, you’ve probably noticed that I’m a big believer in tracking and managing progress to help achieve desired goals.  I can’t believe I haven’t explicitly written about this strategy before as I’ve been publishing my net worth updates for several years now.

That is, if your aim is net worth (or any financial) growth, track and record it on a regular basis.

I started in late 2006 with a net worth of around $200,000 and it has grown over the years to approximately $960,000.  Tracking your net worth is like giving yourself a grade every month (or whatever interval you like) and helps keep your spending/savings for the month accountable.  The key is not to get down on yourself if you report a negative month, but to keep your eye on the long term trend and make adjustments along the way.

For me, just the thoughts of reporting my net worth publicly for hundreds of thousands of people to see keeps me focused on my saving, spending and investing habits.  As a result, I often think about ways to increase my income in conjunction with ways to reduce expensesthen sticking to my investment strategy.

How to Track Net Worth

To start, net worth is your (total assets) – (total liabilities).

Assets include:

  • Real estate – primary residence, rental properties.
  • Investment portfolios – RRSP/TFSA, non registered, pensions.
  • Business Value (if applicable) .
  • Cash – chequing, savings, GIC’s etc.
  • Tangible items – cars, collections etc.

Liabilities include:

  • All Debt – mortgages, line of credit, student loans, credit card etc.
  • Tax liabilities – business income taxation, large RRSPs, and/or capital gains owning.
  • Other Money Owed.

Net Worth Tracking Tools

There are many tools that you can use to track your net worth progress.  For me, I like to keep it simple so I use a spreadsheet to figure out the difference between my assets and liabilities at any particular point in time.  Here are some free tools that you can use:

Here is a free Excel based net worth spreadsheet that includes a nice looking pie chart.  This one is geared towards the US, but you can change the account labels to whatever works for you.

Conclusion

Net worth isn’t the end-all-be-all of financial status, but it’s a great place to start to see where you stand financially.  It’s not about what your number is relative to others, but that you are making progress in the right direction over the long haul.

Do you track your net worth on a regular basis?  At what intervals?

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FT

FT is the founder and editor of Million Dollar Journey (est. 2006). Through various financial strategies outlined on this site, he grew his net worth from $200,000 in 2006 to $1,000,000 by 2014. You can read more about him here.
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bernieB
5 years ago

I have been tracking for about 2 years and find it helps. IE a bad month on the stock side may even out a little with some additional savings. I focused on achieving 0 debt before age 40 while saving along the way as well. Net worth is 1.5 M last month at age 45.

Don Chogni
5 years ago

To easily track your net worth I recommend https://www.networthshare.com/ .

Steva
6 years ago

Nice article. We managed our family finances by tracking our net worth for more than 10 years. We started by using Excel worksheets, tried Mint as well (stopped because it couldn’t handle all of our accounts), but now we use net worth tracking software from the Blue plum software (theblueplum.com). We log our net worth at the end of each month.

Alpha Centauri
6 years ago

I’d recommend doing a net worth statement once a year. No need to fret over the short-term ups and down. Once a year will still give you enough of a big picture. I remember after the 2008 financial crisis, waiting for about 1.5 years do another net worth statement, as I was too disgruntled with my portfolio losses. Interestingly, my portfolio increased in value, not because my rrsp fully recouped, but because I was aggressive about making extra mortgage payments!

Which brings me to an interesting conclusion: If you want the most mindless, risk-free way to increase net worth, then focus on debt reduction – especially debt that cannot be deducted from income taxes. This includes consumer debt and primary residence mortgage debt, for instance.

InvestAsian
6 years ago

Thanks! I’ve been tracking my net worth once every quarter. It’s a bit too time intensive to do it often and property, especially when you get to the “items of value” and collectibles part.

A Frugal Family's Journey
7 years ago

Great article, our family has been tracking our Net Worth for about 9 years, going from a negative $120K to $511K as of December 2013 (excluding the equity in our home).

From our experience, we couldn’t agree with you more…Tracking your net worth allows our family to keep your eye on our finances and make adjustments if we need to. It tells us if we are moving forward or backwards. We’ve certainly have had negative months, but we always learn something from the bad months and therefore many good months tend to follow our bad months.

Inderpreet Kang
7 years ago

I use http://www.mint.com to track my net worth. Its very useful tool and there is app as well to view on mobiles

I like the spreadsheet template mention in the topic

Sampson
7 years ago

Wow. Some blast from the past. It is incredible how much things change in 5 years…

blog is still going strong though.

FT, when are you going to fess up and admit you have $1M. You keep adding new buckets to keep the number below. Soon you will impose unrealistic tax liabilities on all your investments just to stay under the bar.

I guess this just means you just haven’t found a new name for the blog.

S
7 years ago

Sean,
Kudos to you!

I can’t help comparing you to a young man I know whose about to turn 32. He lives at home, has just completed his first year of participating in the labour market and now wants to quit because he’s tired. Mom cooks, cleans and buys his clothes. Dad drops him off and picks him up daily at the GO station. The parents are currently exploring investment avenues to fund his very early retirement because work is too stressful for him, poor lad.

You’re going to reach 500k and this guy’s biggest achievement to date is being able to feed & dress himself. Wow…

Sean Cooper, Financial Freelance Writer and Blogger
7 years ago

FrugalTrader, you really got me into tracking my net worth. Twice a year I like to update my net work to see how I’m progressing. I use a simple Excel spreadsheet. It’s a good feeling to see your net worth increase every few months. My next milestone is to reach net worth of $500K before age 30. I’m well on my way!