How to Track Your Net Worth

Tracking your net worth is the single best way to monitor the health of your finances. Net worth is what is owned minus what is owed. It’s the total value of everything you own—including your house, cars, investments, and cash—minus your liabilities .

Net worth is the single most important financial metric one can track. It’s more important than a person’s salary or monthly budget. Why? It represents the sum total of your entire financial life, reduced to a few numbers. It shows you all of the assets you’ve accumulated over your lifetime. It shows you all of your current debts. The difference between the two is your net worth.

To really understand the power of net worth, it’s important to see how it relates to a monthly budget.

Each month for most people income brings money in and expenses send money out. For those who make more than they spend, the difference adds to their net worth. The difference my result in an increase to a savings or retirement account. Alternatively, the difference may go to pay down credit card, student, auto or other debts. Either way, net worth goes up.

How to Track Your Net Worth

A net worth statement is simply a list of assets owned and debt owed. For most individuals, it should easily fit on a single page. To track your net worth only two decisions need be made: (1) what should be included in the net worth statement; and (2) what tools, if any, should one use. Let’s look at both of these.

How to Evaluate Your Net Worth

Tracking your net worth is just the first step. It’s also important to evaluate the results from time to time. One key way to evaluate the results is to monitor the change in your net worth over time.There are any number of important financial goals. Common goals include getting out of debt, saving for retirement, and buying a home. Measuring the change in your net worth over time encapsulates each of these goals into a single, easy to understand metric

https://www.forbes.com/sites/robertberger/2016/05/01/how-to-track-your-net-worth-and-why-it-matters/#4bafa0d77d0d