First, what is net worth and why should I measure it?
Net worth = Total Assets - Total LiabilitiesFairly simple, right?! So, why measure our net worth?
The biggest reason for measure is to not see how much we are worth, but to give us another stick to measure progress against. Is our net worth higher or lower than the previous month?Step 1: Add up Assets
Using our handy-dandy iPad and Numbers app, I used the built-in Net Worth template to calculate our net worth. While I have already started entering numbers for March, I did the same process for January and February. Here's our numbers so far for March to give you an idea of how the spreadsheet works and looks.
As you can see, Assets are easily calculated by adding up the value of your possessions and more liquid assets (like bank accounts).
Step 2: Add up Liabilities
Our liabilities are fairly easy to add up, as there's only a couple accounts! That debt is quite high! That's why we're doing our budgeting!
Step 3: Calculate Net Worth
While it's really easy to subtract Liabilities from Assets, our Numbers template did the "hard" work for us!
Now you know how it works for us, how have we done so far this year?
With our preliminary numbers from March, we've so far seen an increase of roughly $2,300 in our net worth from February to March.
Most of the increase was driven by contributions and increases in our retirement accounts. While we did remove a bit of debt, the debt needle only moved about $1000 as you can see in the Liabilities row.
Moving forward
Like I mentioned at the beginning, for us measure Net Worth is important because it provides another stick for us to measure ourselves against. We might be so caught up in the daily budgeting and looking at our large debt numbers that we forget the large picture. And in the large picture, we're doing fairly well, considering. Although, we could always do better!
