{"id":1982,"date":"2021-03-07T21:42:20","date_gmt":"2021-03-08T05:42:20","guid":{"rendered":"https:\/\/dadspersonalfinance.com\/?p=1982"},"modified":"2021-03-11T21:36:16","modified_gmt":"2021-03-12T05:36:16","slug":"tracking-net-worth","status":"publish","type":"post","link":"https:\/\/dadspersonalfinance.com\/tracking-net-worth\/","title":{"rendered":"Tracking net worth"},"content":{"rendered":"\t\t
Image by\u00a0Nattanan Kanchanaprat<\/a>\u00a0from\u00a0Pixabay<\/a>\u00a0<\/p> Once you have decided to take control of your personal finances and you have determined who will be your financial buddy, coach or mentor, the next step is to take inventory and determine where you are at with respect to your overall portfolio.\u00a0 Portfolio typically refers to the investments which may be small at the beginning.\u00a0<\/p> \u00a0<\/p> We are looking to create a baseline.\u00a0 As we improve our personal financial position we can set goals and determine how well we are doing.\u00a0\u00a0\u00a0 We need to have this baseline and ability to manager because as Peter Drucker has stated \u201csay you can\u2019t manage what you don\u2019t measure\u201d.\u00a0 \u00a0\u00a0Data provides us with the capability to determine where improvements need to be made and how well we are meeting our goals.\u00a0<\/p> \u00a0<\/p> One metric that provides a good baseline is net worth.\u00a0 Net worth is simply the total of all our assets minus all our liabilities (or debts).\u00a0 \u00a0 Assets would be those things that have a value.\u00a0 They can be equated to some type of cash either directly or after being sold.\u00a0 Liabilities are those things we owe. Things we make payments on.\u00a0 These would include items like credit cards, medical bills, mortgages, and car payments.\u00a0 \u00a0\u00a0\u00a0<\/p> \u00a0<\/p> Here is a simple example:\u00a0<\/p> \u00a0<\/p> Note that the house is always a little tricky when making this type of calculation.\u00a0 I recommend making the calculation several different ways.\u00a0<\/p> \u00a0<\/p> I chose to disclose net worth as option number 2.\u00a0 In my mind it provided a more accurate overall snapshot of where I was at.\u00a0 There is nothing wrong with option 1.\u00a0 Just keep in mind that it isn\u2019t exact but this is true of many things in life.<\/p> \u00a0<\/p> I like to track my net worth on a weekly basis, and I do it by hand.\u00a0 Later we will look at ways of automating this.\u00a0 I would recommend that you review on a weekly basis but if that is too frequent then looking at it on a monthly basis will work as well.\u00a0 The key is to monitor it so that if you see something that does not pass the sniff test of being accurate, then you can start digging deeper into the data.\u00a0 Then act on what needs to be remedied from there. \u00a0<\/p> \u00a0<\/p> Don’t feel bad if the numbers aren’t impressive or they may even be negative.\u00a0 It’s OK.\u00a0 We will work together to make improvements from here on out.\u00a0<\/p> \u00a0<\/p> Now that we have established a baseline.\u00a0 We can take a look at budgeting so that we can further improve out net worth.\u00a0 Tracking will come up again in budgeting but we will be tracking how well we are doing against the weekly budget.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":" Image by\u00a0Nattanan Kanchanaprat\u00a0from\u00a0Pixabay\u00a0 Once you have decided to take control of your personal finances and you have determined who will be your financial buddy, coach or mentor, the next step is to take inventory and determine where you are at with respect to your overall portfolio.\u00a0 Portfolio typically refers to the investments which may be 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