Make Time for Net Worth Tracking Like a Boss

You Can’t Afford Not To!

As I’ve previously mentioned making a net worth tracking workbook for our family was one of the first things I did to understand where we stood financially.  It gives you a point in time reference for your financial health. It can give you insight into the sustainability of your fully funded lifestyle change or retirement.  Maybe you’ve googled a celebrity or even a presidential candidate’s net worth, but do you know your own and how it changes over time?

Let me be clear, net worth is NOT the only thing in life that matters but it is a major aspect of your life and you should be familiar with it –  especially as you are building your savings for retirement. Taking time to plan for the lifestyle you want to live now and in retirement is just as important as meal planning, exercising, or booking that next vacation. Seriously! It’s part of adulting. Front load the work, automate as much as you can, and then get back to other areas of your life (hello, spring break trip to Mexico!)  If you’d like some background on creating a net worth tracking workbook check out this blog post on how we got started. However, today we are going to talk about the case for regularly keeping your net worth up to date and why it’s important. Let’s begin.

Why Make Time for Net Worth Tracking? 

Are you really good at setting a goal and creating a path and keeping at it through the easy and hard times?  Can you stick to that plan regardless of wrong turns or slow downs? Do you make a meal or cookies without tasting them? Heck No! 

If you are like me, I need feedback to know I’m heading in the right direction. And, I need LOTS of it. I use Google Maps when I’m going somewhere new (okay when I’m going somewhere), and your net worth is like the car on your financial map plotting its course. During the bull markets your car may be speeding along and you decide that it might be a good time to diversify and check out a real estate investment. Or, during a bear market, you might appear to hit a detour which temporarily sets your timing back. But all the while, Google Maps keeps you informed as to when you’ll be back on track and to your destination.

Without knowing where you are, it’s very hard to see if you are going to achieve your goals and by when.  So when setting out to reach a big financial goal, it’s important to get feedback and tracking your net worth is how you get that feedback. Even if it takes a little time on your part. It will be worth it. I promise. Getting started doesn’t take much: 

• Pick a recurring time  
• Schedule the time and stick to it
• Spend time to review your net worth with your partner 
• Revise and tweak the time you set aside to meet your needs

Pick a Recurring Time for Net Worth Tracking

Pick a routine date/time that you’ll set aside to update your net worth tracker. We update our spending and net worth monthly except around November and December. We don’t want to spoil surprises around the holidays season (or birthday months for that matter). I like monthly because what gets measured gets done, and nothing exceeds like excess. Cliques, yes, but they are true for me. I needed time to get the process down and get used to calculations I had not been doing before. I tried a few workbooks before I settled on what we needed to figure out our tracking routine. 

Perhaps monthly tracking of net worth may seem like too much for you. If that’s the case, choose another cadence. The point is to start to get familiar with the principles and components and the more you do it, the quicker it will come. So for us monthly works, but quarterly or even semi annually would be great too. Pick something and stick to it for a while until the process is second nature and feels comfortable and sustainable. 

Schedule Time for Net Worth Tracking and Stick To It (at least for a little bit)

Once you’ve determined your cadence, stick it in the calendar so you don’t forget.  I like the concept of sticking it in the calendar because all important things go in the calendar, and this is an important thing. Just like a doctor’s appointment or a session with a trainer. I don’t think enough emphasis is placed on this concept, yet it’s as fundamental as knowing your weight or getting your teeth cleaned twice a year. Also, if you schedule this task, you can also adjust it so it doesn’t get too far away from your predetermined date/time.  The calendar will hold you accountable to getting the updates made and the routine will keep you focused on this important topic. 

We use the first of the month as our reference point. But with Personal Capital you can really choose any date as you can go back in time and see where all your accounts stood on any given date – which I LOVE.  Plan to stick to your cadence for a while at least until you get the process down. Naturally, the cadence that works for you will either become clear or you’ll confirm that what you choose works for you. 

Review Your Net Worth with Your Partner 

This part is critical. While it’s great you are getting the financial picture put together, it doesn’t do any good if your partner is in the dark or doesn’t know the process to update your net worth tracker if you couldn’t complete the process any longer. So, write out the process if that’s what it will take. Or better yet, take turns updating the tracker each month so you both get familiar with the scope of accounts and can ensure it’s sustainable. Need a way to start small? Suggest your partner categorize their amazon purchases monthly in Mint.com or your budget tracking software. Or, figure out a way to gain their interest in some aspect of the budget process or spending tracking. 

Got 5?

Even if it’s just 5 minutes at dinner or breakfast after you’ve completed the update process make sure you share what you learned about the month with your partner. Did you stick to a budget you set? Have you gone over budget and need to adjust for the upcoming month? Did the market help you along the path by going up? Yeah! Or, did the market go down so you could purchase more shares of your favorite index fund? Double yeah! Find something to note about the prior period. Don’t be afraid to talk about the good and what doesn’t feel so good. You’ll experience it all, and that’s a good thing. Maybe the conversations will be painful at first – and that’s good too. Get these conversations out now when time is on your side and can help. Need a conversation starter? 

• Talk about percent change from prior month. Use this as motivation to keep working on your goal. 
• Pick out a category you think you or your partner may want to make a change in. 
• Step back and take a moment of gratitude. Identify something you are grateful for in the prior time period. 

Tweak the Time You Set Aside for Net Worth Tracking to Meet Your Needs

As I mentioned above, your regular cadence will become obvious over time. The main thing to do is just begin. We’ve had a few months that have slipped by when we got busy or been traveling, but for me it’s never been more than 1-2 months. I find the routine to be a little bit like meditation. Taking stock in the prior months actions and setting intentions for the upcoming, month, quarter, half year.  I try not to get too stuck on any one category since it’s the big picture I’m going for each month.  

Why Bother with a Set Date/Time?

For one thing, you are building a new muscle to last you a lifetime. James Clear, the author of Atomic Habits, is an advocate of starting with the smallest change so you can build the habit, and let it set in.  And, that’s what I’m advocating here as well. This is a skill like anything else that gets honed over time. 

Another reason for tracking on a routine basis is it will spark opportunities to fine tune the process, and increase your net worth. That’s why it’s also important to discuss your findings with your partner. This is not an individual sport! So, make sure all the players are on the fields doing their part toward the common goal.   

Use this time to take a look at your credit card statements, and not just for opportunities to save. I’m talking about scanning through for charges that were not made by you or your partner. This is something you should be doing every month. But, it’s easy to skip it if your credit cards are on automatic bill pay. So make a habit of doing this each month across all accounts – even the ones on auto pay. 

Bottom Line on Making Time for Net Worth Tracking

Hopefully this post gives you the confidence to take action and schedule some time for net worth tracking. Remember it only takes 4 steps to get going: 

• Pick a recurring time for net worth tracking 
• Schedule the time for net worth tracking and stick to it
• Spend time to review your net worth with your partner 
• Revise and tweak the time you set aside for net worth tracking to meet your needs

So what are you waiting for? Happy tracking! Still have questions, leave me your questions below. I’ve included a few of the questions we’ve had along the way. 

Frequently Asked Questions

Q: What should my net worth be for my age? 

A: This question is dependent on many factors and where you live. If you google this question you’ll see different multiples of your income by age. And, you can find different US average and mean net worth by age. Blah! However,  because you are here reading my blog, I think you’ll like this post by the Financial Samurai who talks about the above average person – like you! 🙂  Check it out! Sam is great!

Q: I’m tracking how much I have in each of my bank accounts. If I sum these up, is that my net worth?

A: No. Check out my earlier post for a full list of what should be a part of your net worth calculation.

Q: If I’m planning for financial independence, should I include my house in my net worth calculation?

A: Yes and No. First, you should track your overall net worth including your home as one separate calculation. Second, unless you plan to sell your home and live off the proceeds, you should calculate your net worth for your financial independence calculations without the value of your home. 

Q: Can my net worth be negative? 

A:  Yes! Your net worth may be negative if your liabilities are larger than your assets. Your net worth may be positive and negative as you start to compare month to month. One real estate dip or market correction and your net worth will go down on paper. This is only temporary. Markets historically come back and so will your net worth. Don’t panic and sell during the downturn converting paper losses into real losses.