I don't buy much, and I am fortunate that I can afford all of my needs.
Budgets never really helped me as my spending has always been relatively under control.
In 2008 after reading the The Rules of Wealth by Richard Templar I started actively tracking our families net worth.
This resonated so well with me. To me, budgets are like counting calories (and measuring your food). Monitoring your calorie intake and the quality of those calories is definitely an important part of staying on top of your health. But food and health is complicated. Instead of tracking my intake (aka tracking a budget) I prefer to track my output (aka tracking net worth).
Staying with the health theme, that would be like tracking my weight, body fat % (versus muscle versus water) as well as my performance at the gym.
Bringing this back to finances, let's look at how tracking your net worth can be a great way to look at your outputs.
Budgets never really helped me as my spending has always been relatively under control.
In 2008 after reading the The Rules of Wealth by Richard Templar I started actively tracking our families net worth.
This resonated so well with me. To me, budgets are like counting calories (and measuring your food). Monitoring your calorie intake and the quality of those calories is definitely an important part of staying on top of your health. But food and health is complicated. Instead of tracking my intake (aka tracking a budget) I prefer to track my output (aka tracking net worth).
Staying with the health theme, that would be like tracking my weight, body fat % (versus muscle versus water) as well as my performance at the gym.
Bringing this back to finances, let's look at how tracking your net worth can be a great way to look at your outputs.
- Net worth tracking is easy (well easier than tracking budgets)
- Net worth uncovers spending that you might not be aware of
- Net worth shows actual growth (or decline)
Interested in getting started?
Consider once a month taking 20 minutes to track all of your accounts. Anything that you own adds to your net worth (like bank accounts, investments, your home) and anything you owe that reduces it (like credit cards and your mortgage). I typically DO NOT count things like cars, boats, clothes or furniture in my own (asset) category; as I own them for their utility not for how much I will eventually sell them for.
Once a month, 30 minutes, your future self will thank you.