Have you been trying to save money, get out of debt, build wealth, but are not making any progress? I completely understand what you are going through. I have been working to building wealth and through some trial and error (don’t ever go to Target for lunch!), I am starting to see the light at the end of the tunnel. It may be a tiny light, but I can see that the steps I have been making are starting to pay off.
As you may have realized about me, I love excel tables. It’s such an easy way to look at data and track your progress month after month, year after year. Two tables that transformed my financial life are the Track Your Spending table and the Net Worth table. I have been using both of these tables for a decade, they have helped me learn a lot about my relationship with money.
Track My Spending helped me realize where my money was going. I learned that I spend money when I am bored or sad. I have many times wandered the aisles of Target or the mall ($$$) and spent money because I was sad from a break up or missing my family. Realizing this helped me find a new way to deal with that boredom or sadness, and that’s a whole other blog post in and of itself!
The Net Worth table was the kick in the pants I needed to get my act together. Seeing my amount of debt and my minuscule amount of savings, translated into a massive NEGATIVE net worth was shocking, and a bit stressful. It pushed me into action. I realized I needed to figure this money stuff out because no one was going to come rescue. It had to be me.
As a recap, these are the Steps to Wealth we are following. Steps 1 – 4 can be done at the same time, then tackle the steps one at a time. My husband and I are floating in between 5 & 6 right now, so close to busting into step 7!
- Track your spending
- Track your net worth
- Establish a budget
- Start saving ($1000 EF)
- Pay off your debt – except for your house
- Save More! (a full 3-6 month emergency fund)
- Invest in your retirement.
- Mission minded saving accounts: vacations, cars, medical bills, down payment on a house, college
- Pay off your house/Invest/Give back
So, what is net worth anyway? And what’s the big deal?
Your net worth is a simple calculation that takes your amount of debt (credit card debt, car loans, house loans, etc.) and subtracts your assets (savings, retirement accounts, house worth, etc.). While having a table with all of this information is helpful (and I do have a table with all of this since I am an excel dork), I stripped down my table to just include those items you are making debt payments (for the debt category) on and savings/retirement accounts (as the asset category).
In the stripped down net worth table I don’t include;
- Our house, either as an asset or in the debt category. Adding in your house worth can be nice, but it’s not like you are going to sell your house and gain all of that money. You have to live somewhere!
- Physical assets that we could sell, such as the cars, bikes, jewelry, etc. It is great to have in estimate as to what these are worth, but I’m not really going to sell the pearl necklace my dad gave me.
Why I love the stripped down net worth table.
It provides a comprehensive list of your debts and your savings accounts so you know the progress you are making on your commitments (your debt) and how much you are paying yourself (your savings).
Most of wealth building is about being a conscious and active participant in your life. Be aware of how much money you make, how much you need to save, how much needs to go to debt repayment and how much you have left to spend. Knowledge is power, and it will give you piece of mind.
If you don’t know who you owe, how much you owe, or where your money is going, you will have a very stressful life. And life is not meant to be stressful. God wants us to be happy and enjoy life, He doesn’t want you to be stressed about paying your electric bill any more than you do.
I like to keep my Net Worth table in the same excel file as my monthly Track Your Spending tables. As you can tell, I love excel. I love having my data and not needing to rely on an app. And I love looking back at all of the progress, and the mistakes, I have made as I plan for the future.
Be an active participant in your life. Take charge of your finances with passion. This is your life, you owe it to yourself!