Twice a year, for the last 19 years, I do a net worth review. I start one in May & finalize in June other is started Nov & finalized Dec. I started tracking this with a plan to be worth a milli by 30 and now it’s the most important spreadsheet I consistently run. (A thread...)

Net worth is the most important calculation in personal finance. Your income income and expenses are like quizzes and tests but your net worth is the report card—a culmination of what you’ve stacked based on what you’re working with.

Net worth is all of your assets minus all of your debts. Your assets are anything you own of value. Debt is an amount of money you borrowed from someone or an entity who intends to collect.

Assets typically include: cash, stocks, bonds, mutual funds, buildings, land, trademarks and patents, appraised business valuation, valuable jewelry or artwork, vehicles, etc. (Note that income is not an asset)

Liabilities typically include the outstanding balances (not monthly payments): credit cards, car loan, mortgages, home equity loan, personal loan, consolidation loan, student loan, the money borrowed from your loanshark auntie, etc.

Once you subtract everything you owe from everything you own, that difference is your financial report card. It’s ok for this number to be low (and even negative) when you get started. The key is to work on increasing assets while decreasing debt. Everyone starts somewhere.