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Think "Net Wealth" Not "Net Worth"

July 24, 2022

Different from your budget or spending that can vary month-to-month, your net worth is a single number that helps you track your financial health over time. It’s calculated by taking all of your assets, or everything you own of value, and subtracting all of your liabilities, or anything you owe. By taking both your assets and debts into account, it allows you to track a bigger financial picture.

Do you know what your net worth is? You can easily monitor your net worth using Truebill – but what if your net worth isn’t where you’d like it to be?

In today’s post, we break down what’s included in your net worth, how often you should check it and encourage you to think “net wealth” instead of “net worth”. After all, your net worth is not a reflection of you, rather a measure of your total wealth that you can improve over time.

What’s included in your net worth 💰

Your net worth is a measure of all your assets minus all of your outstanding debts and liabilities. This can include everything from cash, investments in your 401k, and a jewelry or sneaker collection on the asset side, to student loans, credit card debt, and car payments on the debt side.

Using Truebill, you can easily add all of your linked accounts to automatically track your net worth over time. Here are some categories you might include:

  • Assets: cash, savings, bank accounts, real estate, cryptocurrency, investments, jewelry, a valuable collection (e.g., sneakers or sports memorabilia), an instrument, a car, etc.
  • Debts: credit card balances, a mortgage, student loans, personal loans, car loans, etc.

Think “net wealth” not “net worth” 💙

One common misconception about net worth is that it’s only for the super wealthy, when in reality everyone has a net worth that may be positive or negative. That said, regardless of whether yours is positive or negative, the most important piece of information is whether it goes up or down over longer periods of time. For example, if you have a negative net worth but that value continues to increase over the course of a year, that means you’re either reducing debt or building wealth – an accomplishment to be celebrated!

Ideally, you want your net worth to be as high as possible, but more important than the value of your net worth is the direction that it moves in overtime. It can be easy to think negatively when you have a negative net worth – and it’s not uncommon, given that so many Americans struggle with debt. Instead, we encourage you to think of it as your “net wealth”. If you were to visualize your net worth on a graph (you can find yours in the net worth tab) you want the value to move upwards over time. If you’re in the negative now, focus on where you’ll be a year from now – so long as you’re moving in the right direction, you’re on the right track.

How to increase your net worth 🤑

Looking to increase your net worth? There are two ways to do this: 1) increase your assets or 2) decrease your liabilities. Here’s how Truebill can help with both”:

To increase your assets

To reduce your debts

  • Use the avalanche or snowball method to accelerate your debt paydown strategy
  • Getting a lower interest rate on your existing loans can help you pay them down more quickly. Consider refinancing your debts with our partner, Rocket Money
  • If you have private student loans, consider refinancing with our partner, Credible (if you have federal student loans, read this article first)
  • Can’t keep up with your debt payments? Consider contacting the National Foundation for Credit Counseling. With your permission, they may be able to work with your lenders to lower interest rates and/or your monthly payments to tackle your debt

How often to check your net worth 🗓

Given that your net worth is an important financial health metric, you may be wondering how often you should check it. Because a larger portion of most people’s net worth consists of investments in the stock market (e.g., their 401k) your net worth can fluctuate widely in the short term. That said, we recommend checking your net worth over longer periods of time – monthly or quarterly. You easily do this in Truebill by visiting the Net Worth tab.

Regardless of where your net worth may be now, we hope this article is helpful in reframing it as a metric to track over time. Similar to your financial journey, the intention is to grow your net worth in the long run. We hope Truebill make it easier to monitor, course correct, and celebrate your net worth wins as you move forward in your financial life.