How to Track Your Net Worth and Why It Matters?

There are many ways to measure your personal, financial, and economic growth. You can use your credit score (most people do), your network, your savings, and your income. It's definitely strange that net worth is often overlooked as a metric for quantifying financial growth. However, this is not a complicated process; therefore, you need to do it more consistently.

In this article, we’ll explore some of the most common reasons why you should track your net worth and how we can help you. There are many reasons why you should pursue it, but we will mention just a few of the very compelling ones.  

1.    The most important indicator of financial health

Net worth is the most important measure of overall financial health. This metric takes all of the key predictors into account, giving you a more realistic picture of your current financial health. It’s a change in perspective on financial goals. On the other hand, if you only look at your assets to estimate your growth, you won't be realistic about it and may overlook items that tie up your funds. Networth takes a comprehensive look at your liabilities and debts, taking into account what debt you have to acquire, to get a better understanding of the overall situation.

2.    Income and Net Worth

Most people agree that income is the most important factor in determining how and what kind of year you will have, and it will give you an idea of ​​your financial situation and your goals for the year. We wish to correct this and bring to your attention that at its core it is untrue. We've all looked at cases where high-income people invested in liabilities and ended up with little to no assets left. These individuals may not even have a quantifiable net worth due to low or non-existent investments. The pay is great, but the bonus points are almost zero.

3.    Adjust progress indicators

Now we call this an adjusted measure because it helps you balance all your assets against your debts and adjust interest rates. This new score is the perfect way to measure your progress over the past semester. Next quarter you will experience the magic of tracking your net worth. If you don't track it, you won't be able to effectively assess the true extent of your loss or debt. It is your best friend and can help you achieve your goals. No matter what you use to track your annual progress, chances are there are some factors you haven't taken into account. If you experienced some unprecedented surprises this year and feel like you need to prepare for certain elements. Let’s introduce the solution. Switch to using net assets as consolidation number.

4.    A true reflection of your investment

Other available metrics don't factor in your investment and its value in the context of your long-term goals, as value can rise or fall. Only net worth is a valid measure of the significance and value of your true investments. Any money over three figures in your bank will essentially depreciate in value, and it's frustrating when you realize a few months later that the value hasn't contributed to your growth. Take the time to educate yourself on how to invest in yourself wisely. You're doing yourself a favor by doing this. You can use your money to do things for you, and at least in our experience we see people making more money through passive investing. Time is the reward.

5.    Eliminate long-term debt

It’s no secret that tracking your net worth and keeping an eye on how debt can lower your grades each semester is a huge motivator for people to pay off debt. To keep a consistent reminder, I recommend assessing your net worth on a monthly or quarterly basis. Ideally, you'll find motivation when you see your liabilities decrease and your net worth increase. Obviously, when you're trying to monitor your net worth, you're going to worry about your finances. Your career is good for you because it motivates you to see results and helps you make decisions that increase your wealth and save you money. It makes you feel in control of your worth and ownership of your future and its outcomes.

6.    Visualize progress

The best thing about tracking your net worth is that it allows you to visualize your long-term net worth progress. Other methods also fail to show overall progress, and it's difficult to track active income, investments and debt. The time you spend visualizing these changes will certainly prove productive, as it did for many people. Below is a visual example of using one of the net worth tracking systems.  Additionally, you can create charts and graphs that will surprise you in ways you haven't thought of before! Net worth is the least prone to deviation and is therefore considered the best measure of improvement.

Conclusion

Our goal with this article is to convince you of the benefits and legitimacy of quantifying your net worth and financial progress, as well as the lasting impact it can have on your financial health. There are many apps you can use to track your investments, budget, and wealth. Just choose a market and rate it!