I read a lot of personal finance blogs, and one theme that’s common with many of them is providing a monthly net worth update. The idea is that by providing monthly updates, they’re being transparent while providing inspiration. If your favourite blogger is saving so much money, you can too right?
To be honest, I used to love these posts. When I started my blog, I debated providing net worth updates, but I just never got around to it. A few months back, I seriously thought about writing my first net worth post, but after consulting Twitter; I decided that you’ll never get a net worth update from me.
Things are different for everyone
The biggest issue I have with writing a net worth update is the fact that it would only apply to me. I’m obviously writing about my own experiences, so all the numbers I provide are coming from a unique situation that can’t be replicated.
I’m not suggesting that everything needs to be identical for net worth updates to matter, but I don’t think it’s ever a good idea to really compare yourself to others. My wife and I are in a dual income situation and we both graduated debt free. My parents also taught me about money at a young age so I naturally had a higher savings rate.
I personally think it’s much more important for me to share lessons I’ve learned or the things I’ve done to save money with you as opposed to how much I’ve saved in the last month. There’s less of a personal touch with these kinds of posts, but I prefer to write practical information.
Let’s be clear. I think net worth updates are very valuable. One of the blogs I first started following was Million Dollar Journey and it was his net worth updates that encouraged me to get serious about my money. It takes a lot of courage to post what you’re worth and have people openly criticize your progress.
What I don’t like is when net worth updates are not accurate. It’s not like I expect them to be exact to the penny, but I’ve come across a few posts where the numbers are clearly inflated. The savings rates listed just aren’t possible and when called out on it, the author will give a vague answer that doesn’t make any sense. When the regular public is calling you out, you know there’s a credibility issue.
It’s also interesting how some people calculate their net worth. If you’re a single blogger, then it makes sense to only present info that relates to you, but once you get married, I think you should be adding the assets of your spouse. Think about it, why would you include the value of your home in your net worth update, but not your partner’s TFSA, or RRSP investments? Honestly, this is another reason I didn’t bother with a net worth update. As soon as I got married, my net worth jumped significantly.
There’s obviously no set formula when it comes to net worth updates, but you can see how one small thing can either undervalue or overvalue your numbers.
It’s important to know your net worth
Despite the fact that I’m not interested in sharing my net worth, I think it’s absolutely vital that everyone knows what theirs is. This isn’t for bragging rights, but rather, it’s a way to keep you on top of things.
I recently spoke to my financial advisor and we went over my net worth. As it turns out, I was doing much better than I expected. It’s not like I didn’t know what the value of all my individual investments were, but when we put everything on paper; my wife I had a higher net worth than we expected.
Now think about this from your own perspective. Some people are stuck at their jobs because they think they need the money. If you calculated your net worth and speak to a financial advisor; you might find out that you have enough money to quit your job and pursue something else instead.
This can apply to people at any age. Your net worth is a way to guide you to your goals. If your RRSP or TFSA is doing well, maybe it makes sense to put money towards your mortgage instead. Without knowing your net worth, you’re sort of flying blind.
It’s not like I’m anti-net worth updates, they just aren’t for me. I do admit that I still enjoy reading them from certain people because I do think the journey is important. Maybe I’m just not that interesting or I’m afraid that you guys will troll me.