When you last visited your doctor’s office, what happened? At some point, your blood pressure was checked. Why? Well, there are a few good reasons:
- First, as a baseline, they can note any changes from a prior visit.
- Second, based on healthy individuals similar to you, they know what should be expected.
- Finally, they can track your progress if this is an ongoing issue for which you have had repeated visits.
Your financial health is no different. An important baseline to establish is your financial “blood pressure,” or net worth. This essential snapshot will show you in a heartbeat the type of progress you’re making as you focus on your important personal and financial goals.
In a nutshell, your net worth is simply what you own less what you owe, or in more technical terms, your assets less your liabilities.
Plan to update this figure at least once a year or more often if you wish. One great aspect of watching your net worth “grow” is: Whether you’re saving and investing more money, or paying down debt, all these actions increase your net worth.
You need this basic fact-filled snapshot to chart your progress. There are several free calculators you can find on the internet to help you. If you’re not ready to develop a long-term retirement plan or see your circumstances changing fairly quickly over the next few years, this is a great alternative to help give you a realistic picture and keep you feeling in control of your finances and future. Set up a regular schedule to update your net worth, and use an accountability partner that cares about your progress to keep you on track.
Since I have the watchdog theme to my website and love dogs, I can’t help but use a dog story. One Christmas, my cairn terrier named Misty received a bag of small bones. Of course, we didn’t give her the bones all at once, but portioned them out to her over the following weeks. She always excitedly wagged her tail and jumped around in anticipation of the event, then would trot off with head held high and treat in her mouth. It was a few weeks later that I was cleaning my son’s bedroom underneath the bed, and lo and behold! There was her neat “stash” of partially chewed bones, which I’m sure she checked regularly.
Her “net worth” was as valuable to her as any amount of money would have been to me.
So put a plan in place to get your “teeth” into your net worth and you’ll be enjoying the results almost as much as Misty!
How often do you check your net worth?