Before I do an official net worth update, I think I’ll start with the progress I’ve made since I started tracking my net worth – all the way back in 2012. I’ll go until 2017, which is a nice five-year spread.
Disclaimer: I only include traditionally appreciating assets in my net worth calculations: liquidable assets (investments), real estate (primary residence only at this point), and precious metals (think jewelry and such). I don’t include things like electronics, clothing, or vehicles because those items tend to decrease in value over time (our vehicles have almost no resale value now anyways). Also, for real estate, I use the municipality’s evaluation of our property’s worth when I receive the tax bill every year to benchmark the “value” of our property.
2012: No idea. Just started tracking. +5%?
Oh, 2015 was a good year! Unfortunately for us, most of the gain from the increase in our property value. 2016 saw the slow decline of our property value, which continues to this day. While it’s still a little bit higher than what we purchased, it was a valuable lesson for me: Don’t rely on property values to boost your net worth. Okay, what should we use then?
Removing Primary Residence from Net Worth Calculation
After our property value began to decline in 2016, I made a separate line item just for investments. Here’s what that looks like:
These numbers include our TFSA’s, our RRSPs, cash on hand, and my pension.
While it’s a far cry from where I’d like our investments to be – solidly in the 6-figure area – I’m really happy with the progress that’s been made so far.
And the percentage breakdown is much nicer (read: increasing over time) than it is in our overall net worth:
2012: No idea. Uhm…maybe +10%?
What’s really crazy is that our net worth – regardless of how you slice it – continued to rise even after I went back to school full-time for 2 years.
Why bother tracking net worth growth?
The nice thing about tracking my net worth is, truthfully, I feel better about myself and my situation. With liquidable financial assets split between 10(!) different accounts, it was really hard to feel like I was making any progress in my finances since the largest amount in any single account was $18,000, and that doesn’t feel like much. By grouping everything together to give me a “birds-eye-view” of my finances I can a) see everything all at once and b) realize I have more than I thought I did!
In the end, net worth is a marker – like the number on the scale. I learned the hard way that the number on the scale is just that – a number. I pay attention to it because it is an indicator of my health (am I underweight/overweight?) because it affects the health and function of my bones, muscles, and most importantly, my organs. So, my net worth is just that – an indicator of my overall financial health; it’s not the be-all of my goals, and probably never will be, but it’s still an important number to track.