Why You Should Track Your Net Worth
Your net worth is the single most important number in personal finance. Here's why tracking it matters and how to get started.
By Wealthly Team
Your net worth tells the full story
Income is important, but it doesn't tell you the whole picture. You could earn $200,000 a year and still have a negative net worth if your debts outweigh your assets. That's why net worth — the difference between what you own and what you owe — is the most meaningful measure of financial health.
The power of tracking over time
When you track your net worth monthly, you start to see patterns:
- Are you actually building wealth? A rising net worth means your financial decisions are working.
- Where is your money going? If your income is high but your net worth isn't growing, something is off.
- How fast are you progressing? The compound annual growth rate (CAGR) of your net worth reveals your true financial momentum.
How to calculate your net worth
It's simple:
Net Worth = Total Assets - Total Liabilities
Your assets include:
- Cash and savings accounts
- Investment portfolios (stocks, bonds, crypto)
- Real estate (market value)
- Retirement accounts (401k, IRA)
- Other valuables (vehicles, collectibles)
Your liabilities include:
- Mortgage balance
- Student loans
- Credit card debt
- Auto loans
- Personal loans
Getting started
The hardest part is doing it the first time. Gather your account balances, enter them into a tracker like Wealthly, and take your first snapshot. From there, update monthly and watch the trend line.
You don't need to be precise to the penny. Rough estimates work fine — the value is in the trend, not the exact number.
The psychological benefit
There's something powerful about seeing your net worth on a chart. On good months, it's motivating. On bad months, it's a wake-up call. Either way, it keeps you accountable to your financial goals.
Start tracking today. Your future self will thank you.