My New Fun Hobby: Updating Our Net Worth Statement

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My New Fun Hobby: Updating Our Net Worth Statement

By JLP | April 11, 2007

Many financial experts say that you should update your Net Worth Statement once a year or so. I update ours about once a month. Why? Because it’s fun!

Why is it fun? Because we paid off our credit cards last year and all the money that was going toward those cards is now helping us build our net worth. It’s amazing how things tend to build on each other. Instead of paying someone else for the use of their money, someone is paying us! In other words, we have reached the point where our money is helping us grow our net worth. Compounding is awesome! I love it!

No matter where you are on wealth-building road, you NEED to keep track of your net worth. It’s not hard. In fact, I even put together a general Excel spreadsheet called the Statement of Net Worth that you can download and put to use. There are tabs for each month for the remainder of the year. I even linked the cells from month to month so you don’t have to do a lot of repetitive work. If you change a number in a cell, the spreadsheets in the months AFTER that sheet will change too. You will have to manually enter any new categories that you might add.

The important thing is to get started now. I’m here to help if you need anything or have any questions.

Here are lots of other posts related to this topic:

Building Wealth Using Other People’s Money

How an Emergency Fund Can Save You Thousands Each Year

Financial Planning for Generation X

AFTER You Get The Job

How to Boost Your Cash Flow in Two Easy Steps!

How-to…Personal Finance Edition - Helpful tips from LOTS of different bloggers.

How to Determine If You Are “Wealthy”

Your Net Worth Statement Part I

Your Net Worth Statement Part II

Your Net Worth Statement Part III

Your Net Worth Statement Part IV

Your Net Worth Statement Part V

Analyzing Your Financial Statements with Ratios

Topics: Financial Math Basics, Financial Planning, Net Worth Statement |

Comments to “My New Fun Hobby: Updating Our Net Worth Statement”

Tom Says:
April 11th, 2007 at 12:52 pm

I can’t believe you said updating your net worth was fun! I thought I was the only one with such a twisted sense of fun. I keep it on a spreadsheet and update it several times a week as investments fluctuate in value and then do a detailed update and save a permenant record at the end of each month.

Tyler Says:
April 11th, 2007 at 1:20 pm

If you use MS Office, you can go to Microsoft Office Online (http://office.microsoft.com/en-us/templates/FX100595491033.aspx?pid=CL100632981033) and download a bunch of neat spreadsheets for free. They have everything and anything you can think of. Some cool net worth ones as well!

Kurt Says:
April 11th, 2007 at 1:40 pm

“Because we paid off our credit cards last year and all the money that was going toward those cards is now helping us build our net worth. ”

Not entirely true. Only the interest on the saved money and the interest on the reduced debt is adding to your net worth relative to last year. When you paid off the principal on your credit cards, you were adding to your net worth. Even if you had $1,000,000 on credit cards, so long as you were paying them off, you were increasing your net worth.

FWIW, many online banking services do this type of thing automatically. Gives you time for other hobbies.

Miguel Says:
April 11th, 2007 at 1:50 pm

I’m with you - I too enjoy updating my NW statement. I used to do it monthly with a complicated spreadsheet that also allowed me to estimate future NW based on certain assumptions about savings, etc. I am admittedly a spreadsheet junky. My brother-in-law, the accountant is even worst - we call him the human worksheet. I think he may have every major life decision mapped out on spreadsheets.

As of the past couple of years, however, I have noticed that I update much less often and tend to simplify things more, which I attribute to a certain amount of success at meeting our PF goals. Also, I pay much less attention to the market swings and prefer to focus more on projecting the long-term impact of savings - i.e. what will it take to become financially independent and how long will it take.

In general, on of my firm beliefs is that in order to become financially independent, one must know with some level of precision, where one is starting from. And then, one must have a pretty good idea of what it’s going to take to attain the goal, even if the reality seems pretty harsh.

Without starting with this info, you’re pretty much leaving your fin’l future to chance.

You have to internalize this information. I find it provides motivation to sometimes delay gratification and save more. And it can also motivate one to find ways to increase income (Working harder, searching for new opptys, new job, career, education, etc).

Conversely, it can also help you to relax more (when you’ve acheived certain goals and feel you are tracking well towards your objectives). For example, there are oppty’s I’ve recently passed up to make a lot more money because the sacrifices are just not worth it at this point. Either way, without a pretty good idea of where I am on my roadmap, it would be difficult to make those informed decisions.

Mary Says:
April 11th, 2007 at 2:18 pm

Thanks for the post - I also enjoy updating my net worth statement! It’s also a much bigger motivator than a budget because the goals I set have a much more tangible meaning. I have mine set up similar to yours, except I have all of the months on the same page so I can quickly see how much I’ve grown from month to month and see what drives the largest growth (e.g. paying off credit cards, investment fluctuations, etc.)

sam Says:
April 11th, 2007 at 3:00 pm

I use Quicken to track my investment accounts, and it does a pretty good job of showing net worth. I don’t track debts like mortgage or credit card bills though, although it is possible to do it in Quicken. I do enjoy entering updates like dividends and quarterly statements, and watching the balance and graphs change, except when they go down rather than up.

Foobarista Says:
April 11th, 2007 at 5:43 pm

We use Excel, and have been tracking our net worth monthly since 2002. It’s nice to see the changes that have happened over the years (since generally they’ve been going up…)

Dave Says:
April 12th, 2007 at 8:11 am

I use Excel and the Morningstar portfolio feature to update our net worth statement weekly. I simply copy the Portfolio Update Report that comes by e-mail into a worksheet and the net worth worksheet searches for the investments by ticker symbol. I have to update the number of shares whenever that changes due to a dividend, additional investment, or withdrawal. Finally, I keep a graph the results, going back to 1994.

db Says:
April 12th, 2007 at 8:55 am

@Kurt:

I think he meant he’s putting into savings what he used to be paying on credit cards, in which case he’s definately adding more than just saved interest to net worth.

JLP Says:
April 12th, 2007 at 9:06 am

db,

Actually, Kurt is right. Paying off debt (minus any finance charges) has the same effect on your net worth as adding the money to savings. So, once the debt is paid off, the money that is put into savings will grow, which will add to your net worth. That was the point I was trying to make but didn’t do a good job explaining it.

Miguel Says:
April 12th, 2007 at 9:27 am

To the point about debt repayment adding to net worth - seeing this in action was definately one of the things that helped incent me to reduce debt. When you can see the impact to your bottom line it makes the impact feel more tangible.

I still pretty much remember the day I sat down to make the entry into my spreadsheet that transitioned my NW from negative to positive. And that was a huge turning point.

LegalTherapy Says:
April 12th, 2007 at 10:14 am

JLP,

Have you made your net worth statements available on-site (or is that just not done…)? I suppose I don’t mind making mine public because I’m completely anonymous behind my online nickname. I’m always curious to see the net worth growth of others who are more interested in finances and more financially literate than I am.

Also, in large part because of things I’ve read on your blog, I recently decided to go the iShares route for a couple foreign mutual funds. Thought I’d give you some credit for that (and no need for your usual disclaimers, I thought it through for myself and did NOT take it as professional investment advice on your part).

Jesse Says:
April 12th, 2007 at 10:24 am

I’m a fan of yodlee for net worth tracking.

Wanda Says:
April 12th, 2007 at 3:08 pm

I used to update my networth every month, but now I just do it once a quarter.

Stacey Says:
April 12th, 2007 at 3:40 pm

Microsoft Money for me…any time I open my “Favorite Reports” and choose New Worth…voila! Instant gratification, b/c all our investments are updated automatically. Certain credit cards, too. I’d never go back to excel…but could convert my report to it, if need be!

JLP Says:
April 12th, 2007 at 3:46 pm

Stacey,

Welcome back!

I tried Money for several years and never liked it. The categories are too rigid and a royal pain to change and I never could get it to update my accounts properly. So I quit buying it and now do everything in Excel.

Customers Revenge Says:
April 12th, 2007 at 8:21 pm

I saw the spreadsheet: Don’t forget to depreciate all the assets every year or you may find yourself very rich in tables and chairs!

I would just take out any assets that you can’t spend.

SteveK Says:
April 12th, 2007 at 8:38 pm

Every time I launch Quicken, my up-to-the-second net worth is in the lower left corner.

Free Money Finance Says:
April 13th, 2007 at 4:19 am

Star Money Articles for the Week of April 9

Here are interesting posts and news this week from the MoneyBlogNetwork members and beyond: Five Cent Nickel suggests how to prioritize your retirement accounts. Blueprint for Financial Prosperity is filing an updated tax return. Consumerism Commentary…

» What To Read This Weekend on Blueprint for Financial Prosperity Says:
April 13th, 2007 at 8:05 am

[...] Many personal finance bloggers keep a running total of their net worth, some public, some privately, and it looks like JLP is joining the tracking net worth fun! I am waiting for the day when the folks who just track their net worth start blogging! (incidentally, if that’s you, Net Worth IQ added a blogging feature a while back) [...]

» What To Read This Weekend on Blueprint for Financial Prosperity Says:
April 13th, 2007 at 8:05 am

Personal Finance and Investing Blog » Blog Archive » Weekly Blog Roundup, Rupert Edition Says:
April 13th, 2007 at 12:51 pm

[...] JLP from AllFinancialMatters thinks updating his net worth statement every month is fun. Obviously, I agree, as I update mine and even publish my statements. [...]

Ben Says:
April 13th, 2007 at 10:25 pm

Thanks for the spreadsheet!

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My New Fun Hobby: Updating Our Net Worth Statement