Here's Why I Track My Net Worth

There's a simple reason I keep tabs on this number.

Being responsible with my money is important to me, so there are a lot of different steps I take to ensure I stay on track with my financial goals. There's one thing I do that's especially important, though: I track my net worth.

Tracking my net worth involves keeping tabs on all of my assets, such as my house, cars, and stock accounts. To do this, I add up the value of everything that I own, and then I subtract my liabilities. These are the debts I have, including my mortgage.

Although I use an app to help me manage most of this -- which estimates the value of things like my home and cars -- it still takes a little time and effort. But I check in on what my net worth is at least once a quarter, sometimes more often. Here's why.

Tracking my net worth helps me get a big-picture view of my finances

Tracking my net worth is one of the most important ways I track my financial progress because it gives me a big-picture view. Otherwise, it's easy to become too focused on little details -- like how much I still owe on my mortgage or how much my investment account balances are growing. Those don't give me an overall understanding of how my wealth-building efforts are going.

My net worth is the best measurement of whether I'm making the right financial moves. It grows when I make good decisions (like repaying debt and investing in assets). It shrinks when I make other choices, like charging big purchases that don't maintain their value on a credit card.

Tracking my net worth also helps me identify patterns and see how my financial life is changing over time. My net worth started in the negative because I had a lot of debt I owed after I graduated from school and bought a house and car. But I've worked on diligently paying off what I owe and have avoided further borrowing. As a result, my net worth trended up slowly over time. For most people, it will follow that trajectory -- and if it doesn't, that could be a red flag that you need to reallocate spending priorities.

Checking my net worth also helps keep me motivated. If I see that I'm nearing a major milestone, it makes me more inclined to pay a little bit extra toward my mortgage or put more money into an investment account so I can hit the milestone sooner. I can also see how far I've come in my journey to become debt-free and financially independent. That's because I can see at a glance how much my net worth has gone up over time.

Check your net worth regularly

The reality is that tracking my net worth only takes a few minutes, especially with the help of apps that aggregate my account data. And it does a lot for my efforts at fiscal responsibility. In fact, checking this number is so important that I think everyone should do it at least a few times a year.

As you watch the progress you're making, you can also reap the benefits of increased motivation and a big-picture view of your finances. Hopefully, it'll help you with money decisions just as it's helped me.