You Have To Track Your Net Worth for the Fastest Path to Financial Freedom

Why Should You Track Your Net Worth

What is Net Worth Actually?

A net worth tracker is a list of assets and liabilities. Good net worth should just fit on a single page for most people. To track your net worth, you simply need to make two decisions. One, what should be in the net worth statement, and the second, what tools, if any, you should use. Let’s have a look at both of them.

How Do You Track Your Net Worth?

The main question that pops up in people’s minds is how. How exactly can you track your net worth? This is both an easy and a tricky question. There are various means to do this. Because we are living in a digital age, there are endless opportunities.

How to Calculate

You determine net worth by deducting all obligations from all assets. An asset is everything that has monetary value that you own. But liabilities are obligations. They drain your resources, such as loans, accounts payable (AP), and mortgages.

How to Evaluate it Once You Start Tracking it?

Keeping track of your net worth is only the first step. It is also necessary to evaluate the results on a regular basis. Monitoring the change in your net worth over time is an important way to evaluate the results. But knowing what to look for when evaluating is what makes it important.

When to Update Your Net Worth

You should ideally update your net worth weekly or monthly. If your net worth includes transactions, the best is to do it weekly. Any longer you go than a month, you risk missing out on precisely measuring your progress. It also affects the understanding of how minor changes affect the big picture. If you do it sooner than weekly, you’ll probably drive yourself insane.

How Does It Help Your Financial Freedom?

There are many things a net worth does. Help you to see your situation better and clearer, for starters. It gives you the biggest advantage in your finances. Let’s dive into how tracking your net worth help your financial freedom.

Good Measurement for Your Progress

Calculating and tracking your net worth may be a great source of inspiration. Hopefully, you have a long-term net worth target in mind before retiring. Tracking your net worth allows you to see how you’re doing. If you’re not moving quickly enough, you’ll notice and have time to act and solve the situation.

You See How Your Assets Work For You

It’s always good to look at your net worth and see that it’s increased significantly. Simply because your investments are performing well. It might be difficult to watch as the value of your investments declines. However, these circumstances highlight the significance of your investment selections. How you invest and manage your money is as crucial, if not more so, than how much you earn.

Helps with Better Handling of Money

Tracking your net worth can help you make smarter financial decisions. If you know you’ll be measuring and tracking your net worth in the future, that concept will be in the back of your mind. Especially when you’re tempted to make a poor financial decision.

Net Worth FAQs

Is there a “good” net worth?

Determining what a “good” net worth is will differ from person to person. It depends on their life circumstances, financial demands, and lifestyle. According to the most recent data from Federal Reserve, the average net worth of an individual in the United States in 2019 was $121,700.

Do you need a specific calculation for net worth?

No. All you need to do is to know how much you have in cash, assets, and liabilities. The only thing you need to have or do is to follow these and know every penny that comes and goes. Knowing these lets you use the formula we mentioned above to get your net worth. It is actually a simple mathematic formula that you see everywhere, even in schools.

Is net worth anything special, or can anyone do it?

Net worth is important to anyone that is dealing with money. This could be a business or an individual. Even students could and should follow their net worth. The main point of net worth is not to know how much you are worth. It is mainly to see where you are spending your money and where your money is.

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A writer who is passionate about startups and business that focuses on informing people about these subjects. Also publishes on decentfinancelife.com

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Atahan Aslan

A writer who is passionate about startups and business that focuses on informing people about these subjects. Also publishes on decentfinancelife.com