Uncover 9 Powerful Insights: Why Monitoring Your Net Worth is Key to Your Financial Success
WHY IT’S SMART TO CHECK YOUR FINANCES
9 Strong Reasons to Keep an Eye On Your Net Worth
Just like a doctor’s check-up, keeping tabs on your financial health is super important. Among many numbers in personal finance such as income, savings rate, and credit score, here’s why I think ‘net worth’ deserves special attention.
1. A Health Check for Finances:
Your net worth sums up your financial situation and gives you a complete picture of what you own (assets) and what you owe (liabilities).
For instance, let’s say you have some debt, but when pushed into context with your assets, things may not look so bad. Your net worth even gives you an idea of how prepared you are to handle unexpected expenses.
2. Beyond the Salary Count:
A hefty paycheck doesn’t always mean you’re super rich. We all know someone who earns a lot but splurges it all on temporary pleasures rather than long-term assets.
In contrast, people who save and invest wisely with an average salary can end up having notable net worth. So, it’s not all about how much you earn, it’s about how wisely you use your money.
3. Your Financial Progress Report:
Keeping track of your net worth can motivate you and show you how close or far you are from your Goals. Just like keeping a weight loss diary helps in health improvement, maintaining a net worth register will help to manage finances better.
4. The Power of your Investments:
The rise or fall in your net worth clues you in on how well your investments are performing. These fluctuations shed light on the significance of your investment choices and can encourage you to learn more about managing your money efficiently.
5. A Push towards Debt Clearance:
Seeing the sum of your liabilities can spur you to clear off your debts faster. Regular net worth check-ups will remind you of your debts and probably motivate you to get them off your ledger and increase your net worth.
6. Smart Money Moves:
Keeping an eye on net worth can inspire smarter decisions with money. Just like athletes think twice before eating an extra slice of pizza, knowing that every decision will impact your net worth might discourage impulsive expenditure.
7. Accounting for Financial Decisions:
There’s no better way to understand the effect of your financial decisions than tracking your net worth. When you spend wisely, your net worth blossoms, and vice-versa. It’s like your behaviour report card, but for money.
8. Support in Loan Approval:
A healthy net worth may play in your favor while applying for loans. Lenders might be more comfortable granting loans or even lowering interest rates if they see you’re on good financial footing.
9. Visualizing your Financial Journey:
Perhaps the best part about tracking your net worth is that it helps you visualize your financial journey over time. It’s exhilarating to see how far you’ve come from the very start. Remember the thrill of seeing your height increase on the childhood growth chart? Your net worth chart could induce the same excitement!
How to Easily Monitor Your Net Worth?
Having covered why tracking your net worth is essential, next comes the ‘how’. The Empower app is one I recommend. It aggregates your financial information and conveniently displays your net worth. Just connect your financial accounts to the app and voila! You can anytime log in and check your net worth.
