It's been about ten months since my last Net Worth Update, both here and personally, so I decided to sit down and run the numbers. I will be honest, I wasn't looking forward to it. I was worried about what my numbers looked like. As I mentioned in my last budget update, my spending has been a bit less controlled than I wanted and so I suspected the numbers wouldn't be stellar.
How to Calculate Your Net Worth
There are different ways to calculate your net worth. Technically, your net worth is the total sum of everything you have, including your personal property and any retirement benefits you have coming to you, minus any debts you owe.
I have chosen to include the following in my net worth:
- Cash accounts (bank accounts, etc)
- Investment accounts (stocks, mutual funds)
- Retirement accounts (Roth IRA and 401k)
- House Value (Zillow)
- Car Value (KBB trade-in)
- Credit Card Balances
- Car Loan
If you will note, I don't track the majority of my personal property. It's just too hard to value. I do track the value of my car because I also track my car loan balance. Of course, earlier this year, I paid off my car loan, so now that's all a positive value. That's the same reason I track my house value. Otherwise, with my mortgage, my net worth calculation would be significantly lower. I'm aware that both the trade-in value of my car and the Zillow cost estimate of my house might not be accurate, but by using the same source of numbers, I'm at least able to track some movement in the numbers.
I also include credit card balances even though I pay them off every month.
However you choose to track your net worth, the key is to be consistent if you want to be able to compare. If one month you include your car and the next month you don't, the comparison won't be reasonable.
My Net Worth Change
The last time I calculated my net worth was last November. So how does it look?
My net worth increased 14%!
I was completely not expecting that change. That feels like a huge number. So I decided to analyze the numbers.
First off, the last time that I calculated my net worth, it had dropped. So this change included gaining that money back and then some. When I look at my net worth as compared to the beginning of 2018, I'm up about 8.7%. Still great, but not quite as dramatic!
I took a look at how my accounts compared. My investment accounts have grown, both due to additional contributions to my retirement accounts and just due to general movement in the market. I consider all of my investment accounts to be long term accounts, both retirement (obviously) and my other investment accounts. So while I like to see those numbers grow, they don't affect my day-to-day.
But what about the cash accounts? In a surprise, they're up too! While my numbers could be better, I've been working on saving more for infrequent bills, and that money is slowly adding up. Yes, it's in reserve for later bills, but it's money that I wasn't setting aside before.
My next steps are to do my best to keep increasing those accounts. I'm planning a big vacation for next fall and I need to start setting aside money for that trip. I also want to be better about setting aside money for gifts, especially at Christmas. I don't like to go overboard on Christmas gifts, but I do like to get things for my family and right now, I don't have anything set aside to buy gifts. So there are a few things on the horizon I want to save for.
Really, I just need to keep making smart choices and keep things steady and not let changes in my income change my expenses.