The other day I was looking at my Net Worth and was very proud of all my hard work to increase it. I started to track my net worth at the beginning of this year. It has been a great way for me to not only track my progress but also my setbacks. It’s also cool to me to see a visual of this as time goes on.
But It got me thinking of where my net worth was last year this time. Well after crunching the numbers I was at $44K in September of 2016. I really have felt like my net worth has been moving so slow the last few months. But after seeing that I have come very close to doubling my net worth in one year actually shocks me! As of today, I am worth $82K. Yet the market was aggressive today so that number is always changing a bit.
Remeber I only make about $50K a year. So just how did I accomplish this in the last 12 months?
I blame it on consistently saving money and investing it. I made building wealth a priority over the last 12 months. I’m trying to build that foundation to my house of wealth. Because I understand the more money I have invested the faster I will see the effects of my money compounding over time. A few steps that helped me stay on track over the last year.
- I made a budget to track all spending and savings.
- I tried to hit a 50% savings rate as often as I could.
- I was intentional with my money.
- I set short, mid, and long range goals.
- I tracked my progress to see the big picture and keep me motivated.
I used mint.com for this task. I love it because it’s free and has so many abilities. I also love that it has an app for your phone. So I literally have a budget with me everywhere I go. Mint is also very user-friendly. I will set my budget for the following month the last week of the month prior. I also will always over estimate each budget to leave a little wiggle room. A budget gives me a solid plan for my money that month. This way I always know where my money is going. I find that many people get to the end of the month and have no clue where their money went.
2. 50% Target Savings Rate
This is a short term goal every month for me. I try to save half of my income every month. Some months I fall short other months I save more. The lowest month I can think of I still put away about 26% of my income. The best so far is around 65% savings rate. Some might think this is impossible. And yes it can be if you make a very low income or have too much consumption. For me, after I really cut a lot of things from my budget like debt, cable, shopping for things I don’t need I started to hit that 50% mark.
3. Being Intentional
I find this to be very important and ties into the above steps. I know what I’m spending my money on and how much I am saving. The more intentional I have become the more I am able to save. This does not mean again that I don’t spend money. I just intentionally spend money. Some months I will give myself $200 to just go spend how ever I feel like it. I call this my “Mad Money” fund.
4. Setting Goals
This is such an important thing in life. I will probably come back and hit it up in a future post. I’m a very goal oriented person. I believe this helps me stay on top of my finances when I set goals for them. My goal for the end of this year was to hit $85K net worth. I should hit that with ease. Plain and simple set goals and crush them.
5. Tracking Progress
I love tracking everything in many ways. It’s an easy way for me to track progress and also easy to see shortfalls. If you don’t track your progress it’s like trying to hit a target at night with a blindfold on. So how do I track my progress with finances? I use Personal Capital to track all my finances. It will track your net worth, spending, savings and a few other tools. I might add it’s completely free. It also has an app for your phone.
Well, that is how I was able to have so much progress this last year with my finances. Now I had a few setbacks along this last 12 months. One was in August actually. I ended up going over budget by $700 in Key West. I just wanted to make sure everyone understands you will have setbacks on this journey. That is life and there is nothing we can do to change that. What is important is to keep pushing and show long term progression. Hopefully, this gets people to get more motivated on their journey and starts a FIRE inside them! I know I’m still chasing that first $100K.
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My favorite free financial tool to manage my net worth is Personal Capital. You get a $20 Amazon gift card for signing up.
My favorite free investing platform is M1 Finance. You get $10 for signing up. No trading or management fees plus you can buy fractional shares.
My favorite phone service is Mint Mobile. You get a $15 renewal credit for signing up. I get a year of phone service for a rock bottom price of $240. As a guy who travels and lives in an RV full-time, this service has been amazing.