Net Worth Transparency: May 2011

I have tracked my net worth for the past two years and it has been the single most important tool for keeping me focused on improving my financial situation. I initially just tracked my spending, created monthly budgets and monitored my retirement savings, but once I started calculating my net worth each month I made significantly more progress towards achieving my goals and paying off my debt.

I believe that discussing personal finances should not be as faux pas as it has become. People are willing to share other extremely personal topics with each other, but when it comes to talking about debt or financial struggles, they avoid it.

To encourage you to be less afraid of discussing your financial situations with others, I am going to share with you my net worth progress each month.

In less than three months I will be getting married and last month I started calculating the net worth of my fiancé and I together. Since we haven’t consolidated our bank accounts and credit cards yet, I have created subtotals for each of the different types of accounts and locations that my fiancé and I have our money.

Cash

The cash category is for actual cash in our wallets and money in our checking accounts. This is the money that we use to pay our monthly bills and credit card balances.

Short Term Savings

In this category is savings that will be used for the wedding, emergencies, and upcoming events in the next year such as trips and gifts. This money is kept in savings accounts and certificates of deposit.

Long Term Savings

All of the savings in this category is our retirement savings. About half of it is in a 401k and the other half is in a Roth IRA. There are also portions of it in a conventional IRA and savings bonds.

Short Term Debt

This category is a snapshot of current credit card and store specific card balances. Each month we pay off all of our cards in full, so this amount is not really carried from month to month. We just pay them at specific times of the month.

Long Term Debt

The last category is based on my fiancé’s student loans from her undergraduate degree. We currently rent our housing, our cars are paid off, and I successfully paid off my student loans last fall, so the only real debt we have together are these student loans.

May 2011 Net Worth

Here’s a look at how our net worth has changed in the last month:

The main things that influenced the changes this month were:

• The retirement portfolio performed well as the stock market rose.
• Additional wedding costs hurt our cash and short-term savings a bit.
• We continue to hold off on paying off the student loan as my fiancé will be starting graduate school in the fall and payments will go into forbearance.
• Other than these items, finances were fairly regular for the month.
• (I failed to include our two vehicles in this update, which amounts for about $10,400. They will be added in next month.)

Until after the late July wedding I expect our net worth to change more drastically than usual with some of the major expenses for the wedding and the transition for my fiancé from employment back to being a full-time student. We feel comfortable at that this point financially, but our net worth won’t grow as steadily as it has in the past year or so due to the change.

Track Your Net Worth

By looking at your entire financial picture once a month and seeing where you are at compared to last month you can determine if you are headed it the right direction.

If you are unsure as to what your net worth is, check out my earlier post to learn how to calculate your net worth in just 10 minutes.

If you want to join me on the journey of continual net worth growth, be sure to sign up for free email updates from Pocket Changed.

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