There is a lot of talk about budgeting, but you do not hear about net worth tracking as much. Budgeting is just one part of the wealth equation. Budgeting tracks your income and expenses which is key. However, tracking your net worth tracks your wealth. It gives you a complete picture of your finances. Are you using the money you are saving each month in a way that is constantly increasing your wealth?
Budgeting without tracking your net worth is like driving without directions. How do you know you are headed in the right direction? To reach financial freedom, you need to have assets (things you own) that generate enough income to cover your monthly expenses. You track these assets using a net worth statement or tracker.
What is a Net Worth Statement
A net worth statement is a sheet that lists all of your assets (what you own) minus your liabilities (what you owe). To better explain the concept, I created an example below.
To the left, we have a monthly budget tracker which I am sure you have already seen and hopefully already have. To the right, we have a net worth tracker. As you can see, net worth is the net of your assets (things you own) and liabilities (what you owe).
Remember I mentioned that budget and net worth are dependent on each other? Assuming no interest, your net worth would be directly increased by
- $1,000 debt payments would decrease your liabilities.
- You would use the $1,000 leftover from the budget to make additional payments or invest (depending on your situation).
As long as you spend less than you make, your net worth will likely increase each month, but it’s not an exact correlation.
For example, if you have investments in the stock market, the value of these investments will vary from month to month. Investments will change regardless of how much you spend. This is why tracking your net worth separately is important to complete the picture.
These days, you can use the same app to track both your budget and your net worth. The Mint App for example.

How Tracking My Net Worth Changed My Life
I’ve known about net worth statements since I took my first accounting class in the 8th grade, but I always thought that little people like me didn’t need one. Net worth statements were for the wealthy, so I never bothered. It felt pointless because I didn’t have anything to my name anyways.
Things changed in 2019 when I had my mini-life crisis. I realized that I was just a few years away from turning 30 and I still didn’t have anything to my name. I started a net worth tracking worksheet I’ve been using to track my progress every month since December 2019.
As of December 31, 2019, I had a negative net worth of about $38,000 and as of March 31, 2021, my net worth is just a few dollars shy of $90,000. I have always been jealous of Ryan because when we met he already had a significant amount of savings in his retirement account and I had ZERO. This was my main motivator to get my life together, so I have Ryan to thank for lighting the fire that led me to make the decisions that got me to where I am today.
You probably already know this, but real estate investing is the reason I have been able to turn around my financial position so quickly. Our buying strategy allowed us to increase our wealth without having the money. If my wealth-building strategy only consisted of stocks, I’d probably still be negative because getting loans to buy stocks makes no financial sense.
Here is a snapshot of our net worth from January 2020 through March 2021. As you can see Ryan’s net worth has changed at a higher pace than mine. This is because he had investments in his retirement accounts and these have performed really well over the last year.
I use Personal Capital to track my net worth. I would have used Mint App, but I had a few syncing issues with a couple of my rental loans. Personal Capital just worked out better for me, but if you are using Mint to track your budget, it would make sense to have it all in one place.

Reviewing your Net Worth
When I review my net worth statement, I look for an upwards trend. My budget tracks how much money is coming in and out of my bank account, but the net worth tells me whether my budgeting efforts are taking me in the right direction. It tells me how well my investments are doing.
It also makes me think twice before getting into new debt. For example, my car was totaled in an accident and I have not gotten a replacement because I don’t want my net worth to decrease with a car loan. You may be thinking, “But Kat, when you get a car, you also have an asset. Wouldn’t that offset your liability?”

I don’t count cars as assets. The moment you drive the car, its value decreases significantly. A car to me has the same value as my sofa or bed. None.
Can I sell it and make a profit after counting interest, maintenance, and repairs? Yes? Then maybe I will count it. If not, then it’s just another piece of furniture.
My budget says I can afford a car, but my net worth says, don’t even think about it. Are you seeing how a budget and a net worth statement go hand-in-hand?
This all goes to say that tracking your net worth is just as important as tracking your expenses. The goal is to increase that net worth number so you can achieve financial independence.
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