🏦 FinancialOS

How to track your net worth month by month

Net worth is the one number that tells you whether the last year of work actually moved anything. It is also the easiest to track, because it changes slowly and takes about ten minutes a month.

The definition, and why it is simple on purpose

Net worth is everything you own minus everything you owe. That is the whole calculation. It is deliberately blunt: it does not care what you earn, what you budgeted, or how disciplined the month felt. It only moves when your actual position changes.

That bluntness is the point. Income can rise for years without net worth following, and that gap is invisible in a budget.

What counts as an asset

• Cash. Current accounts, savings, money market, anything you could spend this week.
• Investments. Brokerage accounts, retirement accounts, index funds, pension pots with a stated value.
• Property, at a realistic price. More on this below.
• Vehicles, if they are worth enough to matter. A car you could sell for a meaningful sum counts. One worth a few hundred is noise.
• Money genuinely owed to you, if you actually expect it back.

What to leave out

Furniture, clothes, electronics and the contents of your house. Technically they have value. In practice, including them adds a large, unverifiable number that never changes in a useful way, and it makes the total flattering rather than informative. Leave them out and the chart starts telling the truth.

The liabilities people forget

• Mortgage, at the outstanding balance, not the original amount.
• Car loans and any financing, including the interest-free kind.
• Credit card balances, even if you pay in full every month. On the day you take the snapshot, that money is owed.
• Student loans.
• Tax owed but not yet paid. The one most people miss, and it matters if you are self-employed.

Valuing a house without fooling yourself

A house is usually the largest line and the least certain. Three approaches, in order of how honest they are:

1. Leave it out entirely, along with the mortgage. You then track your liquid net worth, which is arguably the more useful number if you are not planning to sell.
2. Hold it at purchase price and only change it when something real happens, like a refinance valuation. Understates in a rising market, but it never invents growth.
3. Use an online estimate, revised once or twice a year at most.

The rhythm

Once a month, on roughly the same day. The first of the month is easy to remember; so is payday. Open each account, write down the balance, and stop. It is a snapshot, not an analysis.

Consistency matters more than precision here. A number taken the same way every month produces a trend you can trust, even if each individual figure is slightly rough. Numbers taken carefully but irregularly do not.

Why the chart matters more than the number

The absolute figure is mostly useful for comparing yourself to other people, which is rarely productive. The line over time is what changes decisions:

• It shows whether a raise actually reached your balance sheet or just raised your spending.
• It makes debt repayment visible as progress, which budgets are bad at showing.
• It survives bad months. One poor month looks alarming in a budget and barely registers on a two-year trend line.
• It tells you, eventually, roughly how far you are from not having to work, which is the actual question underneath most of this.

A chart needs at least six data points before it means much, and about two years before it is genuinely useful. That is an argument for starting now with a rough method rather than later with a perfect one.