I want to start off by sharing one of my favorite quotes with you:
“It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.” -Robert Kiyosaki
You ever met a person that’s always bragging about how much they make?
It’s an automatic eye roll 🙄 for me when someone brags about money earned.
The million-dollar question is, how much of your salary do you keep?
Don’t get me wrong, income is important.
But it can also be a misleading, vanity metric that can make folks feel like they’re doing better financially than they actually are.
There are two other metrics that offer much more insight into our overall financial health and ability to build wealth.
#1: Net Worth
In simplistic terms, net worth equals everything your OWN minus everything you owe.
If you’re anything like me you have a dozen (or more accounts) scattered to the four winds.
I find it useful to view all of my accounts in one interface so that I can get a picture of how well I’m doing financially.
#2: Monthly Spending
In my experience, we tend to underestimate how much money we spend in a week, let alone in one calendar year.
Having a single view into spending across credit cards, debit card, checks, and cash transactions can help you detect troublesome spending patterns in specific budget categories.
For me, one troublesome spending spot has always been FOOD, so I track my grocery and dining out expenses closely.
Here is a snapshot of my actual grocery spending for the month of February thus far, which totals $645.37.
I know some folks prefer good ole’ fashion pen and paper budgeting, but leveraging technology can also help simplify the process while also providing a ton of useful data.
I’ve used several options over the years, but my current fave is Personal Capital, which is totally free.
In fact, I grabbed this screenshot above directly from my Personal Capital account.
Personal Capital links to all your accounts such as 401ks, IRAs, brokerage accounts, checking accounts, and credit cards in one location, which allows you to track both of the wealth metrics that we discussed: net worth and monthly spending.
Best of all, if you like visuals, Personal Capital provides a ton of graphs and charts to make analyzing the numbers super easy.
And it provided updates in real time.
Tracking your net worth can be addictive.
Believe me, I know from experience.
But now I’ve settled into the habit of tracking it about once per month.
Here are a few pics of the user interface (**these are NOT my numbers, only illustrations to show what the platform can do)
Personal Capital does offer wealth management services, but for a DIYer like me I’ve never found it necessary.
The free software is sufficient to help me command my money and watch my spending go down as my net worth goes up.
You can check out Personal Capital here for free and start tracking the two most important metrics for wealth accumulation: Net Worth and Monthly Spending.
Are you currently tracking your net worth and monthly spending?