Find out how you can measure your progress.

Net Worth. It’s a phrase we hear all the time - how often does it pop up on Google when you search a celebrity’s name? But what exactly is it, and why is it so important for you?

In a nutshell, your net worth is all your assets (what you own, from property to stocks and shares) minus your debts. It’s such a simple equation yet it provides a vital snapshot of your personal finances that more complex ways of calibrating your accounts won’t.

How to make it work for you:

Every month (or day or week, if you’re feeling really obsessive), you should calculate your net worth as it stands at that moment. Check out our previous post on all the plusses and minuses that need to be factored in.

Now make a date with your spreadsheet four weeks hence and do it all again. And again. And again. At first, facing up to the cold facts of your financial reality might take a bit of courage (why not sweeten the pill by promising yourself a tub of your favourite ice cream while you input the numbers?) but as we’ve said before, facing the facts is the first step to empowerment.

What you’ll soon notice, after a few months of tracking your net worth, is that your goals become clearer and the path to them starts to look more straightforward.

But don’t just take our word for it - check out this finance blogger who has publicly released all his monthly net worth for the past 9 years!

Using this technique, you will clearly see where the losses tend to crop up and which areas of your budget need to be tweaked. And let’s be honest, it’s always going to be prioritizing repaying expensive debts like credit cards over buying a second Mulberry handbag. You know this, we know this, but it might just take a net worth tracker to make you act on it!

Photo by Brooke Cagle on Unsplash.