Do You Track Your Net Worth?

Most have a general idea of what their monthly expenses are, but many have no idea what they are worth.  It doesn't matter if you have $1,500 or $1.5 million, you should know what you are worth.  Tracking your net worth has many benefits, and the beautiful part about all of this is we can use technology to automate almost 100% of the tracking process with tools readily available in today's digital world.

What is "Net Worth?"

Your net worth is simply everything you own (your assets) minus everything you owe (your liabilities).  If you own your home worth $200,000, but have a mortgage for $150,000, the net would be the $50,000 difference.  The same formula works for all of your remaining assets, and totaled up together equals your net worth.

Why Should I Track it?

There are many benefits to keeping a tally on your net worth:

  1. Financial Progress: The name of the game is to be worth more in the future than you are now.  Tracking your net worth allows you to know exactly where you stand today compared to any point in time in the past.
  2. Building Confidence: The single hardest part about saving money is that it takes patience. There isn't always an immediate effect in saving $1,000 to your 401(k).  When you start tracking your net worth you will slowly start to see your assets grow over time, which is a constant reminder to keep doing what you are doing!  Millionaires didn't show just up one day their wealth, they got there by making a concerned effort to earn and save. 
  3. Avoiding the Focus on Just Assets or Debt:  Sometimes we get too focused on what we owe, and do not spend enough time evaluating how we can use what we have to offset the cost of borrowing, Conversely, If you build a large amount of assets, but have equally as much debt, you may not be doing yourself any favors either.  Focusing on the entire financial picture is important when trying to plan for the future.
  4. Applying for Loans - Your net worth is a huge factor, along with your credit score, when applying for a loan.  Banks feel more comfortable giving you a loan if you they know you have good credit and a few dollars tucked away.  Knowing what you are worth going in gives you the ability to estimate what you will be allowed to borrow.

 

How Do I Track My Net Worth?

There are many different ways to keep track of your net worth, each method takes a certain amount of time to track.

  1. Hand Written - Old fashioned pen and paper, not too many people utilize this method any more, but if you aren't confident in using any other method this option still works
  2. Excel Spreadsheets - Download our Sample Here This generally takes 5-15 minutes each month, and you need some familiarity with Excel, but before the next option below, this was the single best way to track net worth
  3. eMoney with Aurora Financial Strategies - What if you could fully update your net worth automatically?  The trouble with the methods above is that they still take time and effort to complete, and unfortunately from time to time, things fall through the cracks.  That is where eMoney can potentially come in to save the day.  eMoney is a financial planning platform that allows you to track your net worth, budgets, investments, and financial plan all from the comfort of your own personal website.  Once your accounts are into the system, your net worth will automatically be calculated for you.  There are other companies that track your expenditures (mint would be one of them), but with eMoney you will never get a pop-up advertisement and you would also have the ability to share your information with your financial adviser.
A Sample of Your Personal eMoney Website

A Sample of Your Personal eMoney Website

How Do I Get Started

If you would like to get on the eMoney platform (free of charge!), please give me a call (765)438-4682 or shoot me an email (billy@billycardwell.com) I'd be happy to get you set up with an online login.  If you'd like to start tracking via excel, click on the link above to download the spreadsheet.  At the end of the day, it doesn't matter what your net worth is when you start tracking, the whole purpose is to ensure that as time passes, your net worth increases!  

Happy Tracking Everyone,

Bill Cardwell CFP®

Bill Cardwell is the founder and President of Aurora Financial Strategies, a financial advisor practice based out of Kokomo, Indiana.  He can be reached at billy@billycardwell.com or by calling (765)438-4682.  Advisory Services are offered through Creative Financial Designs, Inc., A Registered Investment Advisor, and Securities are offered through cfd Investments, Inc, a Registered Broker/Dealer, Member FINRA & SIPC.  Aurora Financial Strategies is not Owned or Operated by the CFD companies