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Tracking net worth is just for stroking your ego.

👆 I disagree with this POV.

Perhaps you’re starting a family and want to buy a 3-bedroom house in the Sunset in San Francisco.

Or maybe you’re fretting about the rising cost of university tuition:

If you have long-term goals, then net worth tracking will help you.

In this newsletter, I break down step-by-step how to track your couple net worth using the Money Abroad Net Worth Tracker and boost your confidence to achieve life goals.

Recently, I wrote about combining your finances with your partner.

One common challenge is agreeing on the “why.”

Or your money philosophies.

This requires diving into the nitty gritty of your relationship with money, how your childhood households treated money, and how you want money to support your shared vision for your life together.

What life goals do you envision as a couple?

Many of these goals will benefit from long-term financial planning.

The point of tracking net worth is not to stroke your ego…

… but to help you and your partner determine if you’re on track to achieving these long-term goals.

For example:

My wife and I recently opened a 529 account - a tax-advantaged investment account designed to (partially) fund our future kid’s education expenses.

This is planning at least 20 years in advance.

When my wife was 13, her parents set the expectation that she’d be responsibility for her university education costs. (Australian universities are more affordable than in the US.)

In contrast, I worked hard to get scholarships and grants to fund ~65% of my college expenses, with my parents covering the rest.

As a couple, we prefer for our future kids to fund their own university expenses, while creating a safety net in case they want to study overseas or attend an elite institution.

The 529 account is this safety net.

Investing $X in the 529 account is one of our money goals.

Let’s take Kid’s Education as an example.

Say you want to save $200,000 in today’s dollars in 20 years.

(This is just a number I made up.)

At 3% inflation rate, that means your goal amount is $361,222 in inflation-adjusted dollars:

Now sum all your balances across accounts within each category.

For both you and your partner.

I group asset categories as:

I group liability categories as:

Your net worth = assets - liabilities.

In this example, I exclude company equity from net worth (you can exclude other high-risk assets like crypto or private investments as well).

By measuring balances monthly or quarterly, you’ll see changes in your financial health over time.

Now, estimate your projected Net Worth using interest rate assumptions.

You’ll see in a minute, but this will help you spot any savings shortfalls for your Life Goals.

I would recommend using conservative figures here.

As a reference, here’s the total real returns of various assets over the past two centuries:

Finally, we tie everything together.

Compare how much you’ll need to save/invest by goal date WITH your projected net Worth at goal date.

This will answer the question:

“Do we have enough money invested (and can be liquidated) to fund our Life Goals?”

Caveats: We didn’t factor in liabilities or taxes to keep the math simple. I also included potentially illiquid assets (RSUs, private investments), but you should remove these to calculate your liquid or “investible assets.”

If you discover that your projected Net Worth falls short of your Retirement Goal, ask yourself:

If yes, then increase your monthly investing contributions.

If no, then consider:

I want you to balance thinking big while staying realistic.

Try to exhaust methods of growing income before downsizing your goals.

Did you like this quick tutorial?

Tracking our couple Net Worth has made me more confident in our ability to achieve our Life Goals.

Give this a try with your own finances:

→ Download the Ultimate Net Worth Tracker ←

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That’s all for today!

Whenever you’re ready, here’s 4 ways I can help you: