Every year, sometime in January, I calculate my personal net worth.  I gather together all my account and investment statements for the periods ending December 31 of the previous year.  I have a spreadsheet set up that compares year-to-year.

First I list all the cash in my savings and chequing account, GIC’s and Money Market accounts.  Then come my long-term assets – non-registered mutual funds and stocks, RRSP, TFSA and a small company pension.

I take my residence value from the city’s tax assessment notice which may not be an entirely accurate amount but I don’t want to go through the bother and expense of a yearly appraisal, so it works for my purposes.  I don’t list vehicles, furniture or other household goods as they are depreciating assets.  If I owned any antiques, art or heirloom jewelry however, I would include them.

Then I list my liabilities.  I usually have a credit card balance immediately after Christmas and I have a line of credit, both of which vary in amount.  I don’t have any other loans or a mortgage and I don’t owe any money to my parents, friends or the government.

Net worth, of course, is the difference between your assets and liabilities.  I am gratified to see that mine is increasing each year despite fluctuations in the value of my assets.  I note that in December of 2008 my investments dropped by about 28% but my house had increased in value.

In December 2009 my house dropped quite a bit but I was gratified to see that my portfolio has almost back on track.  This proves the value of diversification or “don’t put all your assets in one basket.”

Just like the annual reports of corporations I calculate my debt/equity ratio to keep me from too much debt.  Generally this should be under 50%, but I like mine to be less than 5% for my own peace of mind.

I also track the value of all my investments and securities to make sure they are still working for me.  I note the year-end balances, annual dividend and annual return.

This is how I realized that my mutual funds were steadily eroding or staying static year by year.  I can’t afford to wait for a turnaround (if it ever comes, that is), so they were quickly replaced.

I like to develop my own spreadsheets for tracking purposes as I know what is important for me to know and I don’t have any extraneous information that I don’t need.  However, all of the discount trading companies have asset tracking templates, as well as on websites like globeinvestor.com.  You can also calculate returns on weighhouse.com.

How do you track your net worth?

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4 Comments

  1. The Passive Income Earner on September 9, 2010 at 9:53 am

    I use Quicken. I started with it right after university and I have used it ever since. It’s really the family accounting software.

    Otherwise, I do use a spreadsheet (Google Docs) to run scenarios and do other kind of forecasting.

    The only thing with accounting your finance is that you must be willing to put in some time as there is some data entry to be done regardless of the software you use. My bank accounts are downloaded easily in Quicken but not my broker transactions or my company RRSP plan transactions or RESP transactions. So it does require to put in some time to capture everything. I could be an investor if I did not do it though. As you mention, you can compare history and understand where you came from and how you are performing.

    Cheers! I am a regular reader.

  2. Echo on September 9, 2010 at 10:01 am

    I also use Google docs to forecast annual income/expenses and to track net worth. I utilize TD Waterhouse Market Research “portfolio manager” to track my individual stocks in TFSA and RRSP. However I do end up taking that data and manually updating it within my own customized spreadsheet for easy reference.

    @Passive Income Earner, thanks for the comment…I enjoy your blog as well.

  3. Financial Cents on September 9, 2010 at 1:41 pm

    Hey Boomer,

    We sound the same. I use spreadsheets myself, I like playing with them and basically calculate most assets over liabilities – less depreciating cars and rising home evaluations – too much monthly math for me 🙂

    My wife and I are slowly climbing “up there” but lately, I prefer to post my passive dividend income. I find it’s a more relevant financial independence indicator for us. Which reminds me, I have to post September’s data!

    Keep up the good work (with Echo) on your site, I like stopping by. Cheers!

    • Boomer on September 9, 2010 at 6:10 pm

      Thanks for the great comments Financial Cents. I used to use Microsoft Money but I was always behind on my inputting. I don’t need to track every little item so that’s why I now use my own spreadsheets with the data I like to keep tabs on.

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