Where did all your money go? Tracking your net worth


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You know how much money you are worth right? You might be surprised! Net worth tracking, the only way to really determine your personal capital – the financial capital that is – and get an idea of your financial wealth. 

When building up a budget you can easily build an overview on what you save per month, per year and continuing to gain knowledge on how much money you are building on the bank. However, your net worth is much more and it starts with making a list of all your assets and liabilities, and then subtracting the liabilities from the assets to find out your net worth, a simple formula stated as followed.

Net Worth Calculation

Let’s have a look here at what is(n’t) part of your net worth.

If you don’t know where you are going, every road will get you nowhere.   – Modified from Henry Kissinger

What is not part of your net worth?

In short, anything you don’t currently own/owe should not be included in your net worth. This means, don’t add any expected future assets such as an inheritance, or promised payments such as a pension. This also includes unrealised gains on your home – more on this below. Some people like to add the money inside an insurance policy, however, this too is not something you currently own and therefore, in my opinion, it should not be added.

What belongs to my assets?

Cash & cash equivalents

Probably the easiest category of assets. This includes the cash in your wallet and in between your sofa. It includes all money stored at the bank in either a checking – or running account, but also money market accounts, certificates of deposit or anything similar available in your country that can be turned in to cash within a day.

Personal properties

Now we are getting into a more complicated category. This category includes your home, and I’ll begin with something that people might not agree with – don’t use the current estimated value of your house.

With the world-wide web supporting you, it is getting easier and easier to find your house’s current market value using websites like Zillow.com (U.S.) or huispedia.nl (NL). Alternatively, in the Netherlands as probably also in the U.S., the municipality gives a value to the home annually for the purposes of taxes (the Dutch Valuation of Immovable Property Act or VIP act, ‘WOZ-waarde in Dutch), also discussed in my article on mortgage taxes (check historical house values for the VIP act here (Dutch)). Government appraisals are usually not comparable to a market value though!

Appreciation on paper is just that – meaningless unless you are actually going to sell your home right now. The main hurdle is to remove the persistent notion that a home is an investment, it is not! In fact, this is one of the main messages of Robert Kiyosaki’s Rich Dad, Poor Dad. A home is a used asset, you are living there, building memories – not selling it for a quick profit (usually). Therefore, I am a fan of using the value of the house at the cost that you’ve bought it for – limiting the feeling of net worth growth, just because my home is growing in value.

The inverse is true for the next part of this category, the car(s). A car is barely an asset as it depreciates very quickly, with most of its value lost in the first 3 years after leaving the factory. Therefore, do use a current estimate for the market value of your car, instead of the original price you’ve paid for it – it isn’t worth anywhere near that anymore! Also for this there are resources available such as the blue book (U.S.) or the ANWB (NL).

The last part of personal properties involves any valuable of reasonably high values, this includes things such as art, jewellery or perhaps furniture. Personally, I feel this is not really a part of your net worth. However, but if you would be following the book “Your Money or Your Life” by Vicki Robin and Joe Dominguez, one of the biggest inspiration of the FI/RE movement, you would be going around your house determining the current market value of every trinket in your home! As long as you stay consistent, any approach is valid for you.


The last, and perhaps most exciting part, part of your assets are the assets bought for investment purposes. This includes investments in stocks, bonds, ETF’s, mutual funds and anything related to a brokerage account. These are assets that can shrink and grow with the market on a daily base, but they can be sold to liquefy within a (few) day(s), therefore I would agree to use the current value of your brokerage account. 

Retirement accounts, (401(k), (Roth) IRA etc. in the U.S.; in the Netherlands lijfrente (spaar, beleggen or verzekeren)) can be liquefied before retirement (don’t), therefore they can also be added at the current value. Pensions or social security, should not be a part of your net worth as – besides it being nearly impossible to calculate – the promised payment might not be anywhere near your expectation by the time of your retirement.

Investing in real estate? Like with your home, I would suggest to use the value at purchase – however, I can understand you feel it depends a bit on the reasons of investing in real estate. If you are landlord, then you’re probably focussing on collecting the rent and not planning to sell the property anytime soon. But if you are aiming at buying property for resale, the current value might feel more informative. However, it remains similar to counting your chickens before your eggs are hatched – if you’re aiming to resell it, just wait until it is sold to add the value to your net worth.

Lastly, you might be an entrepreneur and have some business equity, again hard to put an accurate finger on it – as market values might not be the same as accounting value – but it is something that can fall into this category.

What belongs to my liabilities?

Revolving debt

The main example of a revolving debt is a credit card. Approximately 35% of Dutch (56% of Americans) have a revolving credit card. A debt that is meant to be paid-off monthly. Around 3% of Dutch have a debt involving credit card (2018), compared to 55% of Americans (2018). You could also think about a home equity loan (‘doorlopend krediet in Dutch), using your home to get a line of credit to withdraw from.

Any outstanding balance on your line(s) of credit, of course, counts as a liability.

Installment debt

In contrast to credit cards, these are non-revolving loans – meaning you have a payment plan in place to tackle the payments over a longer period of time. This includes your mortgage(s), car loan(s) and/or personal loan(s) from friend or family. Student loans are also considered instalment loans, however I put these in the next category as they are less consumer driven then the rest of these loans.

For all of these loans, the remaining value of the debt is part of your liabilities.

Dream debt

The last category of liabilities is what some might refer to as ‘good debt’ – an investment that will grow in value or generate long-term income. This includes any student or business loan(s). Of course, mortgages and car loans can also be ‘good debt’ if they are used to generate revenue, but I’ll leave that for another time.

Any outstanding balance on your student – and/or business loans should be added to your liabilities.


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How often to track you net worth?

Assets and liabilities can shrink and grow on a daily basis, salary comes in, credit card balances are paid off, stock markets crash – checking your net worth every day might cause an anxiety attack. How often should you check your net worth? For sure at least once a year, I personally take my balance at December 31st – the same balance used for my tax return the next year

Now, you might be asking why? Why do I want to measure my net worth? Well simple answer, what gets measured, gets managed – besides giving you a clear picture of the state your finances are in – it helps you monitor the progress towards any of the financial goals you might have set. Besides, seeing where you are now, is a good motivator to take action to get where you want to be (or perhaps should be). Net worth is a representation of the total sum of your financial history, with it you can see the effects of the things you bought and of the ones you did not!

So what are good ways to track your net worth? Well in the age of the internet, many online tracking tools have popped up – and by the time you might be reading this, any list I can give might be outdated – so I invite you to look this up yourself. I prefer a simple spreadsheet (see below) – although it requires some manual labour – it is the quick and dirty way of knowing what I need to know when it comes to net worth. This method relies on you to stop and reflect on your progression and whether your goals are still obtainable, or whether they might have changed.

Net Worth Balance Sheet

The nature of manual net worth tracking also gives you some freedom into what to include and what not – for instance, some people might not want to add rapidly depreciating assets such as a car. The loan is a keeper, so it stays part of your liabilities – a good reason to not buy something you cannot afford!

Are you satisfied with your current net worth? Do you feel it could’ve been better? What is your strategy to improve your net worth this year?

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2 thoughts on “Where did all your money go? Tracking your net worth”

  1. It’s very useful information. Thanks for sharing! one question related with investment though (bonds for example), why current value is used for calculation? isn’t similar like a house current value – meaningless unless i sell it?

    • Happy to hear you liked it! You are absolutely right that a current value of an asset is meaningless unless you sell it right now. Two financial philosophies on that:

      From a philosophical perspective, money in the bank is ~technically~ also meaningless unless you spend (or invest) it.

      From a financial perspective, unlike a home, stocks and bonds can be sold at any given point (during business hours) and therefore could be close to cash. Next to this, can also invest in currency on the stock market – therefore kind of investing in cash.

      Money in your bank account also rises and falls with each bill or paycheck that comes in, just like your stock portfolio will rise and fall from day to day. In the end, it is up to you what you want to take into account for your net worth.


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