Saturday, February 16, 2008

Keep Track of Your Net Worth

Knowing your net worth will tell you where you stand financially and help you to stay on the right path to financial success. Net worth is simply your total assets minus your total liabilities. Assets are things like your home, cash, checking accounts, stocks, retirement accounts, cars, etc. Liabilities include mortgage loans, car loans, credit card debt, etc.

I recommend calculating your net worth monthly and tracking your progress over time. By doing so you will quickly identify areas for financial improvement. You will be able to identify if your assets are balanced or overweight in some areas. You can also use this as a great tool for tracking your cash flow as you monitor your cash and checking balances versus your credit card liabilities on a regular basis.

I like to use an excel spreadsheet to calculate my net worth so I can track and chart trends over time. You can also find net worth calculators online such as Bankrate.com.

Your net worth is the single best metric of financial success that everyone should utilize. Knowing your net worth will help you make sure you are on track to meet your financial goals. Tracking your net worth on a monthly basis can also be a great motivating tool as you watch your net worth grow.

5 comments:

Kristen Zirkle said...

One more blog to add to my daily read!

T Struck said...

@Kristen - I just added the option to subscribe to my blog via Feeder or Email. I hope you can visit daily!

Kristen Zirkle said...

I can check it on my palm. Can you tell me how to come up with an extra $400/mo?? We are having to pay for speech out of pocket and it is hurting...

T Struck said...

@Kristen - I'll be adding topics in the future focusing on creating positive monthly cash flow. There's basically two ways to achieve this 1) increase your income 2) decrease your spending. I know, easier said than done! On February 13th, I wrote "Flexible Spending Accounts Will Lower Your Tax Bill." It is likely that speech therapy would be covered under your company FSA. This could really help you take a bite out of your tax bill by ~$100 per month. Of course you would need to plan ahead for this prior to FSA enrollment. Stay tuned for future tips on increasing cash flow.

Kristen Zirkle said...

Done that. Problem is, we don't know how long we will be needing it so I don't want to put too much $ in my flex account. Look forward to your daily tips! I am obsessed with stretching every dollar. :)

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The articles on Daily Money Tips reflect the opinion of its author only and should not be considered professional financial advice. Please consult a financial professional before making any major financial decisions.