4-Minute Money Monday
Read time: 4 min
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What's inside today: – Why most people have never calculated their real net worth honestly – What almost everyone forgets to count on the asset side – How to calculate it right now, in one sitting |
👋 Hey, it's Travis
I used to think I had a rough sense of what I was worth financially.
Not the exact number. Just a general feeling. Checked the bank account regularly. Knew the debt. Knew roughly what was in savings. I figured that was close enough, and that an honest full calculation would just confirm what I already suspected.
Then I actually sat down and did it. Listed every asset. Listed every liability. Added the car - which I immediately second-guessed, because everyone knows cars depreciate. Then I counted it anyway because the math doesn't care about my feelings about depreciation. Equity is equity. Even though that car equity will eventually depreciate to zero, it is worth something right now.
And that's the thing about net worth - it isn't always consistent, and it won't always go up. It isn't always positive either. For a long time in my life, my net worth was negative. Student loans, credit cards, just daily life moving along without me measuring.
This week's Money Monday is about calculating your real net worth - and why the number is almost always different than what you assumed.
📊 What Net Worth Actually Tells You
Net worth is not a wealth measurement. It is a progress measurement.
Every financial behaviour you have - budgeting, paying off debt, saving, investing - eventually shows up in one number. Net worth is that number. It is the single clearest signal of whether everything you are doing with money is actually working, or whether it only feels like it is working.
You can budget well and still have a net worth that isn't moving if the savings are going straight to spending. You can feel like you're paying down debt and still be losing ground if new debt is replacing old debt. Net worth cuts through all of it. The number either goes up or it doesn't.
Most people don't calculate it honestly for one of two reasons. Either they assume the number is worse than they want to see, so they avoid it. Or they assume they already know roughly what it is, so they never actually check. Both of those assumptions are usually wrong in the same direction: the honest number comes out better than the avoided estimate.
Net worth is the score. Everything else - the budget, the debt payoff, the savings rate, the investment contribution - is the game. You need the score to know if you are winning.
🧠 What You're Probably Forgetting to Count
The gap between what people think they're worth and what they're actually worth is almost always an asset problem, not a liability problem. People count their debts accurately. They undercount what they own.
Assets most people forget:
Old employer retirement accounts.
If you've changed jobs in the last ten years, there is a reasonable chance you have a retirement account sitting with a former employer that you haven't thought about in months or years. It is still yours. It is still growing. It counts. Look it up.
The emergency fund.
Most people mentally file the emergency fund under "money I can't touch" rather than "money I own." Functionally that is correct - you shouldn't touch it. But it is an asset. It is cash that belongs to you. It goes on the list.
Car equity.
Yes, cars depreciate. Yes, yours is probably worth less than you paid for it. Count it anyway. If you owe $8,000 on a car worth $12,000, you have $4,000 in equity. That is real. Check a valuation site for a quick estimate of current market value, subtract what you owe, and use that figure.
The investment account you just opened.
Even if there is not much in it yet. Even if it is $50. It is an asset and it belongs on the list - because watching that number grow each month is one of the most effective motivators for keeping the contribution going.
Security deposits and other held cash.
Rental deposits, any money held in escrow, prepaid amounts you'll get back. It is not exciting, but it counts.
Liabilities - keep it simple:
Total balance on every debt. Credit cards, car loans, student loans, mortgage if applicable, personal loans, lines of credit. You do not need to categorize them. Just the current balance on each, added up. Most people find this number looks less alarming when written down than when it lives in the back of their head as a vague anxiety.
The accounting problem: most people count liabilities with a fine-toothed comb and assets with a rough guess. The fix is to apply the same precision to both sides.
📋 How to Calculate It Right Now
This takes one sitting. Here is the framework:
Step 1: List every asset. (15 minutes)
– Chequing and savings accounts: current balance
– Emergency fund: current balance
– TFSA, RRSP, 401(k), IRA, or any registered account: current balance
– Old employer retirement accounts: log in and check
– Investment accounts: current value
– Vehicle equity: estimated market value minus what you owe
– Property equity if applicable: estimated value minus mortgage balance
– Security deposits or other held cash
Step 2: List every liability. (10 minutes)
– Credit card balances: current total on each card
– Car loan: outstanding balance
– Student loans: outstanding balance
– Personal loans or lines of credit: outstanding balance
– Mortgage if applicable: outstanding balance
Step 3: Subtract. (2 minutes)
Total assets minus total liabilities. That is your net worth.
Step 4: Write it down and date it. (1 minute)
This is your baseline. Every month from here, the goal is a higher number than the month before. You cannot track progress without a starting point. If the number is negative, that is fine. Most people start there. The direction matters more than the starting point.
✅ Money Moves to Make This Week
🎯 Action 1: Hunt down any forgotten accounts (15 minutes)
Before you calculate anything, make sure you have everything. Think back through your employment history - any employer with a workplace retirement plan you participated in. Log in, confirm the balance, and add it to your list. If you can't find the login, search your email for the provider name or call the company's HR line.
🎯 Action 2: Calculate your net worth today (30 minutes)
Open a spreadsheet, grab a piece of paper, or open the Net Worth tab in your Ultimate Personal Finance Package. List every asset. List every liability. Subtract. Write down the number and today's date. This is your baseline. If you have never done this before, this is the most useful 30 minutes you will spend on your finances this month.
🎯 Action 3: Set up a system to track it monthly (10 minutes)
Decide right now how you will update the number each month. Calendar reminder, a recurring note, a spreadsheet that does the math automatically - the method doesn't matter as long as you will actually do it. The baseline you just calculated only becomes valuable when you have something to compare it to next month.
💬 Fund(amental) Quote of the Week
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“You can't hit a target you can't see.” |
You have been working toward something without a scoreboard. Budgeting, paying debt, saving, investing - all of it moving in a direction you couldn't fully see. Now you have the number. That's the target. Everything from here is about moving it in the right direction.
Until next Monday,
Travis