As a long time follower of J$ over at Budgets are Sexy, I began to see the wisdom in his suggestion to track Net Worth (check out J$’s Net Worth history here!). At first, I thought that tracking our Net Worth would be a fun exercise for a few months, but would fade to the background as I found other data points to pursue or calculators to play with. Well, I can now attest to the fact that after 29 consecutive months of tracking our Net Worth, I have found this to be one of the single most motivating and useful tools in our pursuit of financial freedom.
Net Worth as a Tool
Tracking our Net Worth has given me an acid test by which to measure our finances each and every month. Taken in the simplest of terms… did our Net Worth go up or down.
Up = Good.
Down = Bad (or at least, not ideal).
Net Worth as Motivation
I have found that I can have vastly differing emotions and motivations when it comes to our personal finances, particularly spending and saving, depending on the situation I am in. When Mr. Adventure Rich and I had visible, annoying debt on our hands, it was quite easy to drive past the coffee shop, pack my lunch for work EVERY DAY, and forgo the concert tickets that all our friends were splurging on.
But once that debt was gone, it became much harder to pass up the same enticing offers. While there are still many reasons to be frugal and save money, it is a bit harder when the consequence is a lower number in a saving/investing account (which is growing anyways) vs. a clear chop at the balance of a pesky car loan. Enter Net Worth. Net Worth does not let you hide those splurges or excess spending days. Not only that, but Net Worth also provides a constant motivation (“How high can we get our Net Worth this month/quarter/year???”).
Tracking Net Worth has given Mr. Adventure Rich and I a consistent benchmark to measure the financial vitals of the Adventure Rich family.
Net Worth Progress
Over the past 29 months, I have logged into Mint on the first of every month and tracked our Net Worth. In that time period, the Adventure Rich family Net Worth has increased by $146,417!
January 1, 2015- $109,697
May 1, 2017- $256,114
Only three times in the 29 months did our Net Worth drop. Between August 2015, our Net Worth dropped $2,010 due to both stock market fluctuation and the fact that I was on Maternity Leave and not receiving my normal paycheck + retirement account contributions. Again in January 2016, we had several expenses (travel to see family, Christmas gifts, etc) and another minor market flux. And in August 2016, the Adventure Rich family moved across the country! Cue a rental truck, gas across the country (for Mr. AR) and a plane ticket (for Mrs. AR + AR Jr.).
Give it a Try!
Whether you are early in your financial life or a seasoned frugal veteran, I highly recommend tracking your Net Worth. Give it a try for 6 months and see where it takes you. Who knows, maybe you will join the die-hard Net Worth tracking club like me 😉
Always an Adventure,
Mrs. Adventure Rich