How to Create Your Net Worth Tracker
A step-by-step guide to measuring your financial health.
What is Net Worth and Why Should You Track It?
Your net worth is a snapshot of your financial health at a specific point in time. It is calculated with a simple formula:
Assets (What you Own) - Liabilities (What you Owe) = Net Worth
Tracking your net worth is more important than tracking your income. A high income can be misleading if it's accompanied by high debt. A consistently growing net worth, however, is a true indicator of financial progress and wealth creation.
Step 1: List Your Assets
Assets are anything you own that has monetary value. Categorize them from most liquid (easily converted to cash) to least liquid.
| Asset Category | Examples |
|---|---|
| Liquid Assets | Cash, Savings Account Balance, Checking Account Balance |
| Investments | Mutual Funds, Stocks, ETFs, Bonds, EPF, PPF, Gold |
| Real Estate | Current market value of your home, investment properties |
| Personal Assets | Value of your car, jewelry, art (be conservative here) |
Step 2: List Your Liabilities
Liabilities are your debts or financial obligations to others. List everything you owe.
| Liability Category | Examples |
|---|---|
| Secured Debt | Home Loan outstanding, Car Loan outstanding |
| Unsecured Debt | Credit Card Balances, Personal Loans, Student Loans |
| Other | Any other money you owe to individuals or institutions |
Step 3: Track and Review Regularly
You can create a simple spreadsheet (using Google Sheets or Excel) with three columns: Assets, Liabilities, and Net Worth. Update it on a regular basis to monitor your progress.
How Often to Track?
Tracking your net worth monthly or quarterly is ideal. This frequency is enough to see progress without becoming obsessed with daily market fluctuations.
What to Look For?
The goal is a consistently increasing net worth. This can happen in two ways: your assets are growing (e.g., investments appreciating) or your liabilities are decreasing (e.g., you're paying off debt). Ideally, both are happening simultaneously.