Net Worth

If you’re anything like me, you started off taking in content about personal finance from all over the place. Chances are high you are hearing terms you haven’t fully understood, or even heard before. It’s all so overwhelming! Where do we even start?!?

The very first thing you must do is consciously decide that you want to live a more intentional and prosperous life. You know as well as I do that time and money are precious. It’s truly a shame that either of these resources get wasted on things we don’t value.

You, right now, have the opportunity to change your life for the better. Think of the reason WHY you are doing this. A strong WHY is what will motivate us to cross this hurdle of financial health and better our lives!

You motivated yet? LET’S GO!!!!!

Once you have established a strong WHY, the next action to take is to figure out your net worth. It’s not possible to set realistic goals for yourself without knowing where your finances currently are.

Your net worth is simply your assets minus your liabilities. So, it’s all the stuff you own, versus the stuff you owe. It’s important to know what this number is, so we can plan accordingly moving forward.

At the top of this post, you’ll see the SDB Net Worth Statement, which you can download totally for free. It’s interactive, so you won’t have to do all the simple math on your own. This is the template I currently use and fill out monthly. Feel free to create one on your own, just don’t forget anything!

Simply fill out the SDB Personal Net Worth spreadsheet by plugging in your current numbers next to the associated term. Next to “cash” put the $ amount you have in your checking account, next to “home” put the estimated worth of your house, and work those numbers down the line.

I find it important that you don’t put down minor things you own on this spreadsheet. You might have a really cool air fryer worth $300; but in the grand scheme of personal finance, it doesn’t really matter. Even if you have some bonkers TV worth more than $1000, it’s a depreciating product that you will likely use till it burns out. If you decide to sell this TV, feel free to add those dollars to the cash or savings section.

Conversely, I do think it’s important to have ALL of your liabilities on this spreadsheet. I’m not saying you need to figure it out to the penny, but you should be pretty close on each category under the liabilities section. Seeing your net worth grow every month because this section is getting smaller is very motivating.

You’ll see I have a few “other” spots under both assets and liabilities. For assets, this might include a vacation house, a tractor, or a business. Something that has a real value (liquid or illiquid) that could potentially be sold. The same for liabilities, there might be a nagging medical debt you want to keep separate from personal loans or something of that nature. Customize this spreadsheet a way that works for you!

My hope is that it took you less than an hour to gather all this info together. Now that it’s in front of you, how are you feeling?

Have a negative net worth? Don’t freak out! Many people getting started on this path are in that territory. What’s most important now is to identify what is holding you back, and how to attack this problem.

This Motley Fool article gets into net worth by age group for Americans, sourced info through the Federal Reserve Board in 2024. If you want to compare yourself to others, this chart was pulled from that article:

I’m not going to lie… these numbers suck. Granted, the average net worth numbers are much higher. Looking at the median net worth is more accurate, in my opinion, since it tends to shuffle out the ultra-rich and ultra-poor. The Savvy Solo is going to aim for their personal net worth to be above these numbers. Be better than ordinary, be extraordinary!

One reason these numbers are lower than expected might be because it’s measuring net worth regardless of marital status or household size. A married 35-year-old couple with a combined net worth of $260,000 is actually doing really well. As singles/solos we must keep this in mind; remember it’s up to us and nobody else to make it happen!

Now that we have established where we currently stand, we can use this to start creating a budget. We can also use this as a platform to establish our short-term and long-term goals.

It’s best to keep these goals realistic but stretch a little bit. You aren’t going to boost your net worth by $20k in one month by buying the latest hot stock; but you can probably shoot for more than a $200 raise by next month by focusing on high interest debt. I generally make updates to this once a month. It helps keep me motivated to keep moving in the right direction, especially during the tough times.

The real nitty gritty starts when we tackle the budget. Knowing where your next dollar goes is key to building a larger net worth. Let’s take a look at the SDB MFC!

Stay classy solos! ✌️