It’s Net Worth Time!

The beginning of the month is one of my favourite times. It’s a time for new goal setting and, most importantly, updating my net worth.

What is net worth?

Net worth = Assets - Liabilities

Net worth is all your assets (things you own that have value) minus any debts or liabilities (something you owe money on).

For my situation, my assets consist of my condo, my investments (RRSP, pension, TFSA, crypto) and my Jeep. My debts are my mortgage, student line of credit and credit cards.

Once I have my monthly net worth, I like to compare it to the previous month, 6 months and year just to see how much it’s changed in that time period.

What is the benefit of tracking your net worth?

Paying off debt is never an exciting process and often it can feel like it will never end. Determining my net worth on a monthly basis has allowed for me to visualize the changes on an overall basis rather than looking at each individual piece. Yes, my mortgage may feel like it will never be paid off but, overall, my net worth has increased substantially in the last year.

Similar to debt, I can see how my investments have grown over time. When you check in on your RRSP or TFSA on a regular basis, it may look as if there’s no change but when you track it on an annual basis, the changes may surprise you. I know they surprised me!

This keeps me on track with my personal finance goals as it shows the relationship between my assets and debts.

Now, my current situation is fluctuating a lot more recently (thank you unemployment!) but my net worth over the past year, November 2020 to November 2021, has increased 23%. This has been largely driven by my RRSP and pension plan investments with my mortgage decreasing a little bit.

This is why I highly recommend incorporating net worth into your budgeting spreadsheets!