Track your net worth quarterly
“Considering the constant bombardment of consumption pressures it’s no wonder people find it hard to get on track towards achieving financial security. No matter your financial goals, being in a position to visualize your progress at any given time and reflect on that progress provides valuable insight into the health of your financial activities.
“Each quarter, log the value of each asset and debt in Microsoft Excel. Subtotal assets and debts and add a line chart that shows the totals for assets, liabilities and net worth. Are assets increasing and debts decreasing? If not, why? What behaviors are causing debts to increase? Is it an investing problem, saving problem, income problem or spending problem? It’s not how much you have but the direction in which you are heading that matters.
“Many headlines today tell the tale of markets that have recovered from the great recession but that individuals are still behind. Is this really because of the investments or the behaviors? Knowing exactly where you have been and the direction you are going will help you avoid the emotional mistakes associated with the markets (reducing savings when markets go down or taking on too much risk when you don’t have too). Seek a CFP® for advice on changing trajectories.
“Making a habit of this will help to instill the personal awareness to live below, not above your means and help you visualize when it might be appropriate to reward yourself for a job well done.”—William Dion