Net Worth – A Financial Report Card
- The secret to knowing how you are doing financially is to have a measurable data point. A
useful benchmark is your net worth. Start today and track your net worth on an annual basis.
It can provide a wake-up call to let you know if you are doing well or off course. Tracking net
worth over time provides valuable insight into your personal finances and lets you know if you
are making mindful decisions about saving and spending. Ideally, your net worth should grow
as you get older.
Additionally, with interest rates rising, it is particularly important to focus on your liabilities.
Which debt costs are tied to variable rates and should be paid down first? If you carry credit
card debt, consider a low-rate balance transfer (which typically offers an interest free rate for
six to 18 months) if you cannot pay it off immediately to protect yourself from rising rates.
To calculate net worth, add up what you own (“assets”) and subtract what you owe (“liabilities”).