Welcome to my three part series on Net Worth! I’ve always been keen on updating my net worth every month to hold myself accountable throughout the year. Over my next three posts I’ll outline in greater detail all about Net Worth.
- What is Net Worth? What Does it Mean? Who Cares About It? Why You Should Track It
- How to Calculate Your Net Worth – and a friendly excel template to help!
- What should my Net Worth Be at My Age?
What is Net Worth?
Your net worth is the value of all of your assets. This includes all of your financial assets less the value of your debts and liabilities.
Some financial assets include:
- Savings and Checking accounts
- Retirement savings accounts, 401K, TFSA, RRSP
- Work pension funds (where you control the investments)
- Value of your home
- Stock investments or other market investments
Some liabilities can include:
- Credit card balances or debts
- Student loan debts
- Lines of Credit
It’s important that you have visibility to all of your assets and liabilities on a regular basis. For the most part you can find all of these through your online accounts. This will allow you continually update your net worth on a monthly basis to keep track.
3 Reasons Why You Should Care About It
- Important When Applying for Credit. Your net worth is a measure of how strong your financial picture looks like. The stronger your financial health is, the more likely the bank will provide you a more competitive loan.
- Most Important Measure of Wealth. It is also the most true measure of wealth. Since your wealth is defined once all the debt are gone, this is the only way to have a true measure on what that looks like for you.
- Hold Yourself Accountable. What better way to track and measure your goals than with numbers! It’s the most clear way, and this is the best way.
Stay tuned for my next post in my net worth series where I’ll be sharing the details on how to calculate your net worth with some excel files and then some information to help benchmark as to where you should be with your net worth at certain ages.