My Quarterly Net Worth Process

I remember sitting in my condo many years ago, creating an Excel spreadsheet of all my accounts. A few months later I was so excited to update it, convinced that riches would soon be mine. But no – I think it had gone up by a few hundred dollars. Then again a few months later the same thing again. And again. And again. I switched computers and brought over the Excel with me. At the time I didn’t really have a process – plus it was the “lost decade” of investing where investments just went sideways for 10 years. I started this process around 2001/2002 when I was making around $25k per year and had just finished college (debt free). Now, I wasn’t very formal about it at the time. Every so often (randomly) whenever I would remember to do it I would go down my accounts and type them into the Excel. Then I’d compare it to the prior time and hope the number was up.

My current Excel starts in 2010 – my earlier one is printed off somewhere from when I changed computers. I hope I can find it, I like looking at the earlier time when my contributions made up almost all of the growth. It’s like watching compounding come to life! Exciting! (Yes I have an odd sense of excitement).



Why I Do This

I’ve always had the goal of being a millionaire before I was 40. Now that I think about it, I’m not sure why or how I picked that dollar amount. It sounded good to my 20-something self being paid $30k per year. I’d read The Millionaire Next Door and The Wealthy Barber (to this day they’re still two of my favorite books, even though they’re both dated by now), and those books (and similar ones) inspired me to save and invest no matter how little I made. Doing the calculation every few months and seeing the numbers tick up, and up, and up – even through minor market downturns – was encouraging.

But it could also be frightening – like in 2008, or 2012 when my husband almost died of septic shock. So during the scary times, I went long periods of time between making updates to the spreadsheet. I found it easier to ride out the bad times when I didn’t look at the damage being done. I do know at the depths of 2008 I was down at least 40% from where I had been. My 401k cratered and my company’s stock (which I owned a very small amount of) went from over $100 per share down to $4. We really thought my company was going under, and it almost did. Since then I am even more committed to not holding money in my employers stock.

Since 2010, the accounts that I don’t touch (like IRA rollovers) have doubled. Literally, they’ve doubled. I know if I went back to 2008 they’ve probably tripled or so since that time. Seeing the doubling is like seeing compound interest at work. If they double again, and then one more time, we’re talking about serious money. All for sitting there quietly working for me while I live my life.

Looking back is also interesting because I can see how much my investments have changed over time. For example:

  • I used to have money market funds, before those started offering no interest. Ah, for the days when they earned 5%!
  • Look, there’s back when I dabbled in individual stocks – before I sold them all in 2013 because it was too much of a pain to monitor them. At their height the individual stocks were half a percent of my portfolio-I considered it “fun money”. And sure, I made some money, but I preferred the no-pain, mostly-gain method of index investing (which is where the rest of my portfolio was)
  • Oh there’s where I sold some investments to take a long-dreamed of trip right before my husband had his third surgery to try and repair the damage done when he almost died of septic shock
  • Cool, I can see where we refinanced to that 15-year mortgage! Wow, the balance has dropped like a rock since then!
  • Ah, 2012, the year my husband almost died. It’s the only time other than 2008/2009 where I went an entire year between two updates to the spreadsheet. Most years I go a few months between updates.

Looking at your net worth over a period of years is almost like having a diary of your money life. You can clearly see the good times (debt paid off!), the bad (ugh that’s the year the market went down) and the ugly (the year of near death). You don’t see the month-to-month spending like a budget, but you see your assets and liabilities in black and white. You can see if you’re progressing toward your financial goals, treading water, or backsliding. If you’re not where you want to be, you can use other tools (such as budgeting, tracking incomes/outflows,

There are two primary debates I’ve seen about net worth calculation:

  • Do I count the value of my house? The argument against counting your house in your net worth calculation is that you can’t easily turn it into cash. And unless you’re planning to sell it to finance your retirement/financial independence you won’t be able to tap the equity. My thought is to count it while I have a mortgage, but keep it separate from the rest of my calculations. That way I can easily see how much I have saved excluding the house.
  • Do I count kids investments/college savings? The argument against counting college savings is that you’re going to spend it. Well of course you are. You’re going to spend all that you’ve saved, eventually, or someone is going to inherit it. Similarly to the house I count this but separately from retirement/savings/mutual funds.

So what’s the “right way”? Overall it doesn’t matter, you can pick the method that works for what you’re trying to measure. I have specific goals around savings for my kids college, so I count their college savings in both separate subtotals and the overall calculation. I also want to pay off the mortgage, and I consider home equity to be an asset I can tap if needed, so I do count it. But I count it separately so I know what I have in investments only.

So how do I do it?

Every quarter I sit down with my statements from Vanguard (die-hard Boglehead here-swing by their forum and check it out) and get ready to log on to my various accounts. Since I do this every quarter it’s easy for me to see what I’ve put into the spreadsheet and what I have left to check. I keep a separate line for every account so it’s easy to go down the list and check off each one.

  • Savings: I input my savings accounts, checking account balance, and savings bonds using the Treasury’s savings bond calculator for my paper bonds and Treasury Direct for the electric ones. For the paper bonds I have them saved on my computer, so I only need to open and update the file to today’s date. I also input the kids savings accounts, investments, and savings bonds in their separate categories
  • After-tax investing: I grab my mutual fund and 529 balances and pop them into the Excel file. I get this mailed to me.
  • Retirement: My 401k and various IRA (rollover, ROTH, traditional) balances goes here
  • Mortgage/Home Value: As mentioned I keep the value of my house steady in the calculation from the 2006 purchase price. You could use Zillow if you want to estimate a current value, but I don’t like how much it bounces around. Another approach I saw others use is to ask a realtor once a year for a current value and use that. I liked that approach, but I don’t really feel like calling my realtor. I log onto my mortgage company’s website and put in the current balance.
  • Other Debt: This is where you would put a car loan, credit cards, student loan, personal loans, or anything else that you owe to anyone. I pay off my credit card every month but I still put in the current balance into the spreadsheet as of the day I do the calculation, so the financial snapshot is accurate. After all if I owe $300 on my credit card and have $1300 in the checking account, I really only have $1000 net. Not counting the credit card is just kidding myself/inflating my net worth.

After doing that I let Excel do the math:

  • Savings + After tax investing + Retirement + Home Value – Mortgage – Other debt = net worth
    • Note: I actually do sub-calculations on the way to the bottom line number. There are five categories I subtotal:
      • Savings and investments
      • Kid 1 college
      • Kid 2 college
      • Kid 3 college
      • Value of house net of all debt (home equity)

How long does calculating net worth take?

Only about half an hour to 45 minutes once per quarter. Since I do it regularly, the spreadsheet is all set up and I just go down the list and check off each account on the list.

What do I do with the net worth calculation?

First, I show my husband so he knows what accounts we have and how much is in each one. I’m the financial nerd in the family and he doesn’t really care very much, but I want to make sure if something happens to me he can easily find out where all the accounts are. Then I fill in my two wall charts – one for my goal on the mortgage and the other for the goal on the kids college. I show my older kids the college wall chart, so they can learn that saving slowly over time plus compound interest helps you reach your financial goals.  Usually they don’t care and aren’t that interested, but I’ve noticed lately my 13-year-old is getting more interested every time I do this. I think it’s because college is only five years away for him now so it’s getting more real.  I don’t turn this into a big lecture, I just show them the chart and explain what the goal is, where we are now, and how much is left to go.

I also look for things that might need to change. For example I eventually decided to just sell of that half a percent of my investments that were in individual stocks because overall the expenses were high and they were doing no better than the 99.5% of my investments that are in index funds. Also I sold off my money market account when it started returning 0.1% (sniff…I miss the pre-2008 rates on money market funds). Doing this calculation helped drive me to refinance into a 15 year mortgage, and I look forward to it every quarter.

How do you calculate your net worth? Do you like looking back at your money diary and your progress towards your goals, or have you never run the numbers? Let me know in the comments.

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21 thoughts on “My Quarterly Net Worth Process”

  1. It’s a mixed bag monitoring net worth. I monitor for fun but I remember in 2008 watching it tank through no fault of my own. As such I don’t use net worth as a goal, even if it I do treat it as somewhat of a motivator and another data point on my overall household health.

    1. Yes, in 2008 I used the “don’t look” strategy to avoid making a dumb decision. Of course that was after I ran the numbers and saw the 40% decline. My husband had to remind me of the famous Buffet quote I’d mentioned to him over the years – “Be greedy when others are fearful, and fearful when others are greedy.” It’s served me well over the years.

  2. I too am a bit nerdy and have an excel spreadsheet that goes back from 2008. It’s amazing to see how I went from basically nothing to where I am today.

    I personally do not count my house in my net worth process or my son’s 529 plan since I figure that’s his money and not mine. With that said I’ve been pleasantly surprised as my net worth has almost doubled in the last two years. I honestly had no idea that I had done as well as we had.

    I guess it’s better to be pleasantly surprised than rudely 🙂

    Thanks for sharing!!!

    1. Not counting home equity or 529’s is pretty common. Isn’t it amazing how much growth you can see as you do the calculations over the years? Especially if you started in 2008 when the market was bottomed out.

  3. I’ve only been calculating this for less than a year, so no happy history yet. I’m doing it every 6 months – at the end of the financial year, and at the end of the calendar year (I’m excitedly waiting for 1st January 2017, only 4 sleeps to go!) I don’t include our house at all, and I have 2 separate calculations for my NW – one that includes my superannuation (401k equivalent) and one that doesn’t, because my super is locked away at the whim of the government.

    1. I’ve actually been watching a show on YouTube called “The Checkout” that covers Australian consumer issues, including super funds. It’s interesting to learn about the differences in investing and in consumer laws! Makes me wish I could buy all my things in Australia. 🙂

      1. I had no idea that show existed, although we definitely know the group creating it. Yes, we do have pretty good consumer protection laws, but as you can see – just because they exist, it doesn’t mean that people follow them! Thanks for the tip, we can watch a few more now.

  4. We use a few online tools to monitor our net worth and financials. It took a while to get past the fact that we needed to provide our account credentials, but it sure is convenient.

    We use Mint to track almost all of our accounts, with the exception of our 529 accounts. So the net worth here considers our home value and uses a Zillow estimate for the current market value. We also use Personal Capital with the same settings – including the home but no 529.

    We use SigFig to just track our retirement accounts. So this view doesn’t contain any personal property (house, cars) or cash accounts. A couple of things stand out on the net worth comparisons between SigFig and Mint: If I can believe Zillow, we have a nice amount of equity in our home. Looking forward to paying that mortgage off in the next four years. The other observation is that we have way too much money in cash – need to get more of that invested.

    1. I used to use Zillow for the house estimate, but in my area it kept swinging around wildly. And house prices aren’t really that volatile here. So I decided to just set it at valued what I bought it for 10 years ago and leave it. I know it’s not accurate but I don’t think Zillow is good at valuing houses in my particular area. Glad to hear you’ve found the tools convenient!

  5. Interesting question re home equity. I include it in our net worth calculation because the house is one of our biggest assets and excluding it would not give a true snapshot of our position. Over the last year we have made major inroads in paying off our mortgage so it’s nice to see that the money we are channeling towards paying off our debt is not getting swallowed up in a big black hole 🙂

    I then have a different number relating to FI – and there I do not include the house. That said when I calculate our target FI number I assume we will be paying no rent and include a budget for house maintenance, so the house does get a cameo after all 😉

    1. Good strategy! That’s similar to what I do with breaking down the net worth into different categories. The subtotals don’t include the house until the very end when I’m calculating the total financial snapshot.

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