It's been a number of years since I revealed my net worth. I've still been tracking it, but instead of doing it once a month, it is more or less once a quarter. One could argue that I should get in the habit of doing it on a specific date. That would allow me to compare year-over-year to gauge growth and come up with some pretty charts.
Alas, I haven't done that for two reasons:
- I'm kind of Lazy. With two kids and a dog, it isn't my highest priority to have it scheduled. Why? Well for the other reason:
- Much of the information is nebulous at best.
I want to expand on that later point. Being in my late 38s, a large percentage of my net worth is in real estate and the stock market. Either one, or both, can change drastically at any given time. I've seen each them do it several times in my lifetime and if I live out my life-expectancy will see them change drastically several more times.
I can take some action, such as diversifying my holdings, but I have no control over either the stock or real estate markets. I suspect most everyone reading this is in the same boat.
It simply doesn't matter if I measure my net worth at specific times because I know that at any given point it can be plus or minus 10% what it is right now.
That said, it is still important to look at your net worth. It gives me a gauge of where things are going over time. If it isn't going up, there's a problem. If it's going down, there's a problem. If I were to take a three-year view of a time of good market growth and saw it stand still, there would be a problem.
I was fortunate enough to look at it last week, which happened to match-up with a time last year. In that time, our net worth is up 18.6%. As expected, a lot of the growth is from real estate appreciation and the booming stock market.
Perhaps more importantly, I can see a net worth milestone in the distance. Until I did this last calculation, my binoculars simply weren't powerful enough. It's extremely unlikely that such growth would continue for another 12-16 months, but if it did, we'd probably reach that milestone.
It would be a stretch, as growing kids will certainly bring down our savings a bit (but they are so worth it!). In addition, we'd have to have almost everything fall our way. It's happened before, but it isn't the kind of thing we'd want to count on.
Seeing this milestone in the distance gives us a target, something to try to work for. That's powerful motivation. If we work hard and don't make it, we won't be demoralized as we knew that good portion of it was out of our control anyway. It's a psychological win-win.
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