Feeling like you don’t know where to start with your finances? Former Marine David Pere is here to help. In this video, he breaks down why you absolutely need to track your net worth.
No time to watch the video? No problem! Here are the highlights.
Your net worth is the value of everything you own minus your debt. Even if you buy a property worth millions, if you have debt on that property, your net worth takes that debt into account.
Track your net worth to keep your spending in check
Net worth is one of the most valuable methods for tracking your personal finances. Knowing your net worth can help determine where you spend too much money. For example, if your net worth drops, you’ll have to figure out why.
Net worth is more than just income
Income is not the only factor in your overall wealth. It’s also how much you spend and how you spend it. Not all debt is bad. Incurring debt that ends up earning you more money is good debt. Bad debt includes things like auto loans and consumer debt. Spend your money intelligently to maintain control of your net worth.
The Baader-Meinhof phenomenon
When you increase your awareness of something, you start to see it around you more frequently. This is why it is so important to write down your goals. The more you focus on your vision, like increasing your net worth, the more your brain recognizes opportunities to make it happen. Want to know more about this phenomenon? Check out this resource.
Track your net worth quarterly
What gets measured gets managed, so track your net worth often. If you track your net worth every quarter or more, you will better understand what affects it. You’ll notice what actions make your net worth increase and be able to put them to work. Use a spreadsheet or an app to track your net worth more easily.
The factors that increase your net worth
Your net worth will generally increase when you increase your assets and decrease your liabilities. For example, if you get a huge bonus and spend it on a vacation, your net worth will not go up. But if you use that bonus as a down payment on a home, your net worth will improve. Also, every time you make a loan payment, your net worth increases.
Level up your financial readiness
David Pere is a former active-duty Marine who is on a mission to educate the military community about financial readiness. Most people hear that term and roll their eyes, but Pere wants everyone to know that readiness can be achieved – without a lot of effort. He teaches personal finance and real estate investing to service members to help increase savings and increase their chances of achieving financial freedom.
Want to learn more about Pere? Check out the Military to Millionaire website, and connect with him on Instagram or Facebook. Subscribe to his YouTube channel here! Take a look at David's book – The No B.S. Guide to Military Life here.
Looking for more ways you can be financially strong? Check out what's new on our Mighty Money page.