Calculate Your Net Worth – Why Do It And How To Track It For Free
A frequent term you see bounced around in regards to your personal finances and money management is the idea of net worth.
Budgets, saving, investing, debt repayment, income generation and all the individual elements of your financial situation feed together to create this metric known as net worth.
It’s your financial health snapshot.
Will not tracking your net worth negatively impact your finances? No, not directly. Your net worth is just a number and by no means do you need to be actively tracking it.
However, tracking your net worth has many benefits and it can serve as a fundamental money metric in your financial journey. Especially when you’re first starting to take control of your money and life.
Best of all it’s quick and easy to calculate with the support of free automation tools (or on your own). Plus it will keep you engaged with whatever those financial goals are that you’re reaching for.
This post will touch on:
- What Does Net Worth Mean?
- Which Assets and Liabilities Should You Include In Your Net Worth Calculation?
- What Are The Benefits Of Tracking Your Net Worth?
- Personal Capital – Ultimate Free Net Worth Tracker & Tool For Americans
- Mint – Free Net Worth Tracker & Financial Resource For Canadians
- Google Sheets (or Excel) – DIY Net Worth Tracking
What Does Net Worth Mean?
The calculation behind your net worth is actually pretty simple. It boils down to Net Worth = Assets – Liabilities. That’s it.
You’re taking everything you own or hold of value and are subtracting everything you owe or are obligated through debt to repay. The outcome positive (or negative), is your net worth. The bigger the number, the “better”.
Your net worth number is your personal financial snapshot or financial health indicator.
Ideally, if you were looking at your net worth on a graph it would continue to grow up and to the right on the standard X/Y-axis graph.
Net Worth = Total Assets – Total Liabilities.
Which Assets And Liabilities Make Up My Net Worth?
There’s no one size fits all when it comes to your finances and tracking your net worth is no different. We will need to speak in broad generalities as everyone’s collection of assets and liabilities are unique but there are consistencies across most.
Personal finances are personal and however you best manage your money is the system you should use.
But first let’s quickly define assets and liabilities. Assets are resources with economic value. Liabilities are financial debts or obligations. Remember our net worth calculation is total assets – total liabilities = net worth.
- Chequing Account
- Savings Accounts
- Retirement Accounts (401k, IRA, Roth | RPP, RRSP, TFSA)
- Brokerage Investment Accounts and/or Taxable Accounts
- Other Investment Accounts (GIC, REITS, etc.)
- Home Value (use a site like Zillow for a home value estimate – Americans only)
- Vehicle Value (Kelley Blue Book can help determine value)
- Other Valuable Assets (I personally don’t include any small assets or other assets in my net worth. However if you want to, I’d limit this to high-value jewelry, artwork and collectible pieces)
- Student Loans
- Vehicle Loans
- Personal Line of Credit
- Credit Card Debt
- Back Taxes
- Family Loans
In the coming sections of this post we will touch on two awesome free tools that can help automate this process for you. Some prefer to do this on their own in Google Sheets (or Excel) or by hand. Others prefer a combined approach with the free online tools and then customization.
I fall in the ladder with the combined approach of automation tool and personalized tweaking via Google Sheets.
Why Should I Track My Net Worth? What Are The Benefits?
As noted above, you don’t have to track your net worth. However, it does provide a variety of benefits and I’d recommend you do if you’re starting to make efforts to better manage your financial situation.
Personally, its given me insight into where I currently stand, how I’m trending and motivation to continue to make progress.
1.) Holistic Snapshot Of Your Financial Situation
Actively managing and upkeeping your net worth, through automated tools or on your own, gives you a complete picture of your financial health.
Are you holding too much cash? How are your investment accounts tracking? Is the principal owing on your mortgage falling faster now? Your net worth can help you make decisions related to your finances.
2.) Progress Tracker
Building wealth and bettering your finances would be much more difficult if you didn’t know where you stood. You’d be trying to achieve a goal without understanding how you’re progressing.
Are things actually improving? What gains am I seeing? How is your financial health trending over time? The tools mentioned below, Personal Capital and Mint, make tracking your progess so much more efficient.
3.) Goal Setting
When you’re juggling debt, saving, investing and earning more, staying committed to multiple goals can be overwhelming. Remember what we mentioned before? All those elements of your personal finance feed into this one metric.
If you’re being honest and tracking your net worth with truthful intentions, that number doesn’t lie.
Actively looking to improve your financial situation requires accountability. See my post 6 Tips To Help Create Accountability With Your Personal Finances.
Staying committed and taking ownership of your finances is only made more effective by using your net worth as part of your financial toolbelt. The two tools we will touch on, Personal Capital and Mint, can support that accountability.
If you’re committed to bettering your financial situation, tracking your net worth is an invaluable motivational tool.
When you’re in debt that chase to hit net worth $0 is a HUGE milestone. And when you’re building wealth, it becomes a game. The motivation of seeing those figures increase put your money momentum into high gear.
Personal Capital – Ultimate Free Net Worth Tracker For Americans
What Is Personal Capital?
Personal Capital is one of the most popular and effective FREE financial management tools for Americans. Their membership is over 1.6 million users and the combined value of all the accounts on their platform is $500 billion.
The free Personal Capital software helps set your long-term financial strategy. By linking your bank accounts, investment accounts and credit cards, Personal Capital becomes your all-in-one financial tool.
You’re able to calculate your net worth, set a budget, manage investment accounts, and plan for retirement.
Whether on your desktop, laptop, tablet or smartphone their easy to use, intuitive suite of financial tools gives you access into all your accounts with a single, secure membership.
Security At Personal Capital
The company is an investment advisor registered with the SEC and security is noted as their highest priority. Your data is encrypted with AES-256 with multi-layer key management and no individual person at Personal Capital has access to your credentials.
A partnership with Yodlee, beefed up fraud detection, daily transaction monitors, device access management and a dozen other features are noted on their website’s security page.
Tracking Your Net Worth With Personal Capital
Tracking your net worth on the Personal Capital platform couldn’t be easier. The dashboard on Personal Capital displays your Net Worth Tracker on the main display.
The various categories (cash, investment, credit, etc.) are laid out in a visually appealing and easy to understand manner. The graphs and key headlines help provide you everything you need to know about your net worth in one place.
The power of Personal Capital’s financial tools pulls in all the information from your different financial accounts and delivers you that one metric: your net worth.
Other Benefits & Features Of Personal Capital
- Fee Analyzer: this tool helps you discover how much hidden fees are costing you and impacting your financial future. Your retirement accounts, financial institutions and credit cards, might be charging you annual fees, transaction fees or other admin fees. The Fee Analyzer ensures you’re alerted of these troublesome costs.
- Investment Checkup: seeing how your investments are performing and the potential opportunities for improvement are made easy by the Investment Checkup tool. It’s essentially a free advisor that shares insight on risk, target allocations, trends, benchmarks and performance reports.
- Retirement Planner: this free tool is dubbed the most sophisticated, realistic retirement calculator available. Build, manage and forecast your future with the Retirement Planner. Analyze spending, prepare for big expenses or income and set your finances up for success ahead of retirement.
Sign Up For Personal Capital For Free
Are you convinced that Personal Capital is a great financial tool? Award-winning financial software, a collection of money management services and it’s completely FREE.
Unfortunately, Personal Capital hasn’t extended it’s services to Canada yet. However, Mint is an amazing financial resource for those north of the border that offers many of same benefits and features for free.
Mint – Free Net Worth Tracker For Canadians
What Is Mint?
Mint’s user base now totals over 20 million.
Similar to Personal Capital, Mint looks to provide all your financial information in one place. From tracking your net worth, budgeting, managing bills, securing a free credit score and monitoring all your finances, Mint is a great tool to add to your money management system.
Security At Mint
As mentioned, Mint is owned by the parent company Inuit Inc. Inuit also owns and operates TurboTax and QuickBooks, the tax systems trusted by millions of users.
Mint is certified by Norton and participates in VeriSign scanning to secure sensitive data. Their system is built off of bank-level security and SSL encryption.
The mobile Mint app safeguards your account with a personal 4 digit PIN and also uses the Touch ID on applicable mobile devices.
Tracking Your Net Worth With Mint
After syncing your financial accounts to your Mint account, Mint automatically updates your information every night and based on your Assets minus Liabilities, calculates your net worth.
The system, both web-based and mobile app, are free to use and your net worth is displayed within the Accounts overview section.
At times with Mint you’ll need to do some customized tweaking and editing in order to get the most accurate picture of your net worth. Sometimes accounts are double counted, items are missing, you might need to manually enter assets or liabilities, etc.
That’s why I personally use the combined approach: Mint and my own Google Sheet DIY tracker. This helps set up a system that best fits my needs.
Other Benefits & Features Of Mint
- Budgeting: the main benefit of Mint most often promoted is their budgeting system. I use their budgeting platform and it’s helped me cut back on my spending. Mint tracks your spending, automatically categorizing all transactions and tracks progress versus the budget goals you set. It’s super intuitive and modern plus gets better synced to your spending as time progresses.
- Alerts & Bills Management: another great feature in Mint is their notifications system. You can customize these alerts to notify you of overspending in your budget categories, bill due dates, and suspicious activity. It helps you better manage your money and stay on top of your finances.
Sign Up For Mint For Free
Mint is free and the setup process is quick and easy. The registration process will guide you through and you’ll be set-up in a matter of minutes.
Google Sheets (or Excel) – DIY Net Worth Tracker
Given the simplicity of the actual calculation to determine your net worth, doing this within your own spreadsheet or by classic pen and paper is another option.
Developing your own tracker gives you the opportunity to personalize as best possible. Everyone’s financial situation differs slightly, so the ability to set this up to fit your needs can make it the most ideal solution.
This provides you the most flexibility and customization.
Want A Template For DIY Net Worth Tracking?
I made a standardized Excel spreadsheet that you can use to track your own net worth. It’s a framework that you can use to add, remove or edit financial details to best suit your own system.
Get The DIY Net Worth Tracker Spreadsheet
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Including this DIY Net Worth Tracker Spreadsheet. Personalize and customize tracking your net worth in Excel.
However, Personal Capital and Mint can still play a role in this DIY system. Their automation and tracking can help you by doing the back end work for you . Plus they both have other amazing features and functions that can support your financial tool belt.
I use Mint to sync all my accounts and then pull that data from the main dashboard into my own Google Sheet. From there I adjust the numbers with the little nuances I know about my money that Mint might not. And then I track my progress each month.
Personal finances are personal.
If tracking your net worth helps you make momentum with your finances and keep progressing forward, then there’s no better time to start doing it than today.
As mentioned earlier, you don’t need to track your net worth. It isn’t essential.
But as you navigate your financial journey, tracking your net worth can help you better take control of your money and life. The benefits from doing so will help you track your financial standing, establish goals, create accountability, stay motivated and more.
Here are some other posts to help you take control of your money and life:
- The Personal Finance Resources And Content That Saved My Life
- Understanding Your Credit Score And How To Check It For Free
- 6 Tips To Help Create Accountability With Your Personal Finances
- 55 Great Online Udemy Courses For Millennials, Entrepreneurs And Side Hustlers
- 25 Books On Personal And Professional Development
- 35+ Rewarding Side Hustles Anyone Can Do To Earn More Money
- 75 Podcasts To Improve Your Life, Finances, Business, Health & More
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