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A Great Tool for Tracking Your Financial Progress

life hacking Aug 13, 2021

I want to introduce you to a tool I've used for many years to track my financial progress.

It’s not really an every day tool like a budgeting app. It’s a tool I’ll glance at monthly or every few months.

The focus of this tool is on tracking your net worth. Your net worth, as calculated by this tool, are your assets minus your liabilities. You can import all of your asset accounts and all of your liability accounts into this tool and it gives you a big picture view of your financial health.

As you think ahead toward retirement & financial freedom, you want to see your net worth number growing over time. This gives you a good indication that you'll be financially prepared for the time in your life when you don't have any income coming in from your job.

Types of assets you can import:

  • Bank accounts (cash)
  • Investment accounts (IRAs/401ks/HSAs/529s/stocks/bonds, etc)
  • Real estate (primary home & rental property)
  • Cars
  • Jewelry/Art
  • Businesses
  • You can even create your own custom asset accounts

Types of liabilities you can import:

  • Credit cards
  • Car loans
  • Mortgages
  • Student loans
  • You can also create your own custom liability accounts

When you're young, your net worth number is often not too exciting to look at, but it's important to keep track of. The reason it's not too exciting is that your net worth is probably negative. And not just a little negative, perhaps in the 6 figures negative (due to your home loan). You just need to be aware of this & be looking to increase your assets & pay down your liabilities over time.

Here are some major milestones you'll want to track over time:

  1. Negative 5-figure net worth :: This is quite an accomplishment if you are a homeowner! If your net worth is somewhere in the negative 5-figures, like -$90,000 for example, that means you've likely paid down your house & other debts enough to be below 6 figures of debt and/or your investment account balances have increased significantly. That's awesome!
  1. Zero net worth :: Having a $0 net worth doesn't sound great, but it's actually another great accomplishment! It means that your assets now equal your liabilities. You've accumulated enough assets and paid down enough debts to even them out. You're making progress!
  1. Positive 5-figure net worth :: This is when your net worth is between $10,000-$99,999. Another big milestone. You're continuing to pay down debt & your assets are growing beyond your liabilities.
  1. Positive 6-figure net worth :: Now you're making big progress. Your net worth is over $100,000. Perhaps you have quite a bit of equity in your house and your retirement accounts are growing. Your liabilities are now significantly less than your assets
  1. Positive 7-figure net worth :: Most of you will be aiming for a 7-figure net worth by retirement age, or for some pursuing financial freedom, much sooner. This is when your net worth grows past a million dollars. Congratulations! You'll be able to draw from your investment accounts/assets in retirement and supplement any money you get from social security.

Most of us know what we make each month & what we spend each month. But we also need to keep an eye on the big picture. What's your net worth? Is it trending in the right direction? Are you saving & investing what you need to be in order to prepare for the future?

Meet Personal Capital.

Personal Capital will help you keep an eye on your net worth. It has a great web interface and a nice app that has 33,000+ mostly 5-star reviews. And it's completely free.

They have a great referral program, too! If you refer Personal Capital to your family & friends, they give you $20 for each person you refer if they click on your referral link.

I'll give you my referral link if you'd like to give me credit for referring you & you can give others your referral link once you join.

Mine is: https://pcap.rocks/c2119539

*Note: While this is a great app for tracking your net worth, I'm not necessarily recommending you follow their investment advice. Once you hit a 6-figure net worth, they'll likely call you and tell you more about ways they can help you invest your money. I know a lot of people look forward to this call, not because they'll use their services, but because it's a sign they reached a net worth goal! 

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