Knowing your net worth is important in tracking your financial goals. To calculate your net worth, you simply add up the value of all of your assets and subtract all of your liabilities. Let’s define these terms below:
Assets are items of value. They include cash, crypto, personal items, and your properties. Calculating your total assets may involve adding up all of your cash on hand, cash in bank accounts, cash in investment or retirement accounts, pensions, and more.
Liabilities is another word for debt. Examples of liabilities include taxes, car loans, student loans, mortgages, personal loans, credit cards, and other lines of credit.
Your Net Worth Statement
Completing your net worth statement on a monthly or annual basis is important in understanding where you are in life. Are you on track to retire with more than $1 million in the bank by 65? It can be very difficult to keep track of all of your assets and liabilities. For this reason, I created a new Net Worth Tracker spreadsheet. Using my Net Worth Tracker, you can document and save all of your assets and liabilities. More importantly, you can track if you are WINNING! Here is a preview of your Personal Net Worth Statement.
Net Worth Growth Through Debt Reduction
Decreasing your liabilities is more important than increasing your assets. This means you shouldn’t be buying a new car when you have credit card debt. You shouldn’t be buying an investment property when you still owe money on the mortgage of your primary residence. Focus all of your energy on eliminating your liabilities. The Velocity Banking Strategy is my favorite net worth growth strategy that works through rapid debt elimination. The strategy can save you hundreds of thousands of dollars in interest.
Net Worth Growth Through Retirement Investing
With your liabilities gone, you can accelerate your net worth at Full Throttle. This involves heavily investing in your retirement accounts. Examples include the 401k, 457b, 403b, SEP IRA, Simple IRA, Traditional IRA, Roth IRA, and HSA. Each of these accounts have their own Contribution Limits and IRS rules around your age, income, and even the type of health insurance you may have. With employer-sponsored plans, a percentage is taken out (pre-tax in most cases) to go into your retirement account. It can be easy to go above the contribution limit. Do you know what your 6% monthly contributions add up to?
Exceeding the annual contribution limits will get you in trouble with the IRS. You will be forced to pay 6% in fees annually on the excessive amount until you fill out an excessive contribution form to withdraw the money, or reclassify the overage to a previous year. Your tax situation can get very messy very fast. Even I have messed up and went over the limits on our HSA. For that reason, I created a Contribution Limit Tracker that displays all tax-advantaged retirement accounts, their contribution limits, and their specific rules. This spreadsheet can compliment the Net Worth Tracker and F.I.R.E. (Financial Independence, Retire Early) spreadsheets I have available below or in my Shop.
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Contribution Limit Tracker$5.00 -
F.I.R.E. Budgeting and Expense Tool$10.00 -
Net Worth Tracker$8.00
Summary
We hope that these spreadsheets can help you identify and reach your financial goals while being well-informed along the way. The purpose of Finance Throttle is to help you accelerate your net worth through personal finance. A Net Worth Tracker and Contribution Limit Tracker are important tools to have in your Personal Finance wallet.
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